Personnel/Administrative Affairs Committee

PERSONNEL/ADMINISTRATIVE AFFAIRS COMMITTEE FEBRUARY 10, 2011 A meeting of the Personnel/Administrative Affairs Committee was held on Thursday, February 10, 2011, at 7:00 p.m. in the Aldermanic Chamber. Chairman Ben Clemons presided. Members of the Committee present: Alderman Kathy Vitale, Vice Chairman Alderman Arthur T. Craffey, Jr. Alderman Paul M. Chasse, Jr. Alderman Richard P. Flynn Members Not in Attendance: Also in Attendance: Mayor Donnalee Lozeau Alderman-at-Large Brian S. McCarthy Alderman Mary Ann Melizzi-Golja Alderman Michael J. Tabacsko Alderman-at-Large Mark S. Cookson INTERVIEWS Historic District Commission LouAnn Fornataro (New Appointment) Term to Expire: January 31, 2014 Mayor Lozeau It has been a little while since I have been to visit the committee with an appointment, and before you tonight I would like to introduce LouAnn Fornataro. LouAnn currently serves on one of our boards already, the Fire Code Board, and LouAnn is willing to serve on the Historic District Commission. One of the positions on Historic District is for an architect, and for quite some time Mike Findley from our Community Development Department has been serving in that capacity. He resigned some time ago, and looking for somebody to fill that position LouAnn came to my mind. As you can tell by her resume, she has extensive experience. One of the things that I think is particularly important that LouAnn brings to the table is she really knows Nashua. She volunteers and does things with local non-profits. She brings her skillset and her opinion to different meetings at many times for no reason other than people are asking her and she is willing to do it. LouAnn is familiar with the work that the Historic District Commission does, and with some of the members on the commission. I really believe that she would be an asset to this commission. Chairman Clemons Thank you very much. Mayor Lozeau You are very welcome. Chairman Clemons LouAnn would you like to introduce yourself to the committee and say a few words? LouAnn Fornataro Personnel – 2/10/11 Page 2 My office is at 196 Main Street in the Masonic building. I live at 28 Norton Street at the top end of French Hill. Chairman Clemons Thank you for your willingness to serve on the Historic District Commission. It is certainly an important committee. Obviously you are going to bring a lot of expertise. I see that you have been in the industry for a while in Connecticut and New Hampshire, and that is going to be helpful I think when we are looking at the historic district and that sort of thing. I appreciate your willingness to serve, and would open up the floor to the committee or members if they have any questions. Alderman Flynn Thank you for coming in tonight. This Building Code Board of Appeals, when did you serve on that board? LouAnn Fornataro I believe I am still an alternate on both the Building Code Board of Appeals and the Fire Code Board of Appeals. Alderman Flynn Oh you are on both boards still? LouAnn Fornataro Yes. Alderman Flynn But you are an alternate? LouAnn Fornataro Yes. Alderman Flynn Have you ever worked for the City of Nashua in a professional capacity? LouAnn Fornataro As an employee or providing services? Alderman Flynn Yes. Personnel – 2/10/11 Page 3 LouAnn Fornataro Neither that I know of. I am never worked for the City of Nashua as an employee, I am sure of. For professional services, I don’t believe I have ever provided paid services to the City. Alderman Flynn Usually we don’t get such a long resume. It is quite an impressive resume. Usually we get a little bit more of a short bio. I was interested in where you live. I am glad to see that you live in French Hill. I think that is an appropriate feeling for the charm or the character of the City of Nashua. LouAnn Fornataro I have been practicing in Nashua since 1991. Alderman Flynn Did the Mayor recruit you or is this something you had an interest in yourself? LouAnn Fornataro Bob Sampson, Mike Findley, and the Mayor. Alderman Flynn Thank you very much. Chairman Clemons Are there any further questions or comments by the committee? LouAnn thank you very much for coming this evening. We will be taking up your appointment later in the evening although please feel free to exit if you wish or to stay, but it could be a long meeting tonight. LouAnn Fornataro Thank you. Pennichuck Corporation Interim Chief Executive Officer (CEO) John L. Patenaude (New Appointment) Alderman Chasse This is a very different type of individual coming in front of us tonight due to the fact that this is going to be a highly compensated employee for the City of Nashua. When we talked about this at a full board meeting I had mentioned that I was going to get the rules for what you can ask and what you can’t ask. Before we go any further, state and federal law prohibits certain types of discrimination in employment. Age is one of them. If I was interviewing Alderman Clemons I could go through the back door to find out his age, which is also illegal so if I asked Alderman Clemons how long he has been living in Nashua you would respond? Personnel – 2/10/11 Page 4 Chairman Clemons Twenty eight years. Alderman Chasse Are you a Nashua native? Chairman Clemons Yes. Alderman Chasse I just found out how old he was. That precludes that you are asking his age. That is something we have to watch out. We can’t ask anything about disability, gender, marital status, national origin, race, religion, or sexual orientation. With that I will hand this over to you later. I don’t know about the State of New Hampshire, but I know in Massachusetts we can’t ask if he has a felony. We can’t ask anything about his criminal record. That is done in Massachusetts through a background check and then you make your decision if you want the employee or not. I’m not familiar with the New Hampshire law on that particular thing. Those are the certain things that we have to be careful with when we ask questions to Mr. Patenaude. Thank you. Chairman Clemons Thank you Alderman Chasse. Mayor Lozeau Thank you. Mr. Chairman I am pleased to present to you tonight Mr. John Patenaude as my recommendation for the Interim CEO for Pennichuck should the acquisition take place. As you know, Mr. Patenaude has been working for the City now in a capacity as a transaction executive is what we have termed that position for almost 8 months now. When you look toward putting somebody in an interim position I think one of the most critical factors is that you look around at immediate people who have been working in that field and determine if you have somebody that could move into that position. John is a known quantity to myself and the team and I think to many of you here on the board as you have worked with him through this process. He is uniquely in a position to bring that experience, that due-diligence work that he has done, the relationship that he has built with many of the employees on the senior management level at Pennichuck as well as our team, to the table. It is important, especially in this instance, that the interim be somebody that is not interested in a permanent position. It is important that there is some continuity to the employees and that they know what to expect. John’s experience at Nashua Corp. and his experience in the financial world and in the tax world really comes at an important juncture of what we are trying to do here. Often times when you look at positions like this you would think wouldn’t it be great if we had a lot of people applying for this job and we could make sure that we are competing and getting the best person for this position. And in instances when you are hiring permanently I would agree. But in an interim position, I don’t think that is what you want to look for. When you start with a company or for instance some of you I know have had experience starting a new board, a new agency, a new business, there are different phases in that development and sometimes when you begin you start with somebody and your executive director may be somebody that has skills in development and organization and then at some point you might look back and say okay the company or the agency has moved to this level and now the skillset we need is very different than when we began or if you have had a company that has been in place or an agency for 20 years or more and you have served on a board you may be looking at it saying okay a company that is this seasoned, based on Personnel – 2/10/11 Page 5 where we want to go with it, we need this kind of CEO. I believe and I hope that you would agree and that John tonight in responding to your questions and participating in this interview, that you will see that John is bringing the right skills at exactly the right time for where we need to head with this acquisition. I would close by only saying to the committee that I believe that it should be the board of directors of this company that hires the permanent CEO and not the shareholder, which is what we would be. With that Mr. Chairman I would be happy to sit back and participate as appropriate. Chairman Clemons Thank you. Mr. Patenaude would you like to introduce yourself to the committee and say a few words? John Patenaude I live at 1 Timber Lane in Hudson, NH. I have been working on the Pennichuck transition since June of last year. I was originally hired to really be the transaction executive for the City to bring the agreements to closure and also the transaction to closure through the PUC filings and everything else that is required in financing. I think you all know me from the transaction. Just as a little background, I have spent 18 years at Nashua Corporation; the last ten years or eleven years actually I was there as CFO and worked with a number of CEOs during that time period. Prior to that I came into the company as the Director of Taxes, but also as sort of the utility hitter for the company, and did various projects for the company during that period. I also have some background in public accounting on the tax side not on the audit side, and also worked for chemical companies in my past, and Sanders Associates, which is now BAE. That is my basic background. Chairman Clemons Thank you very much for coming this evening. I have a few questions to ask; pretty broad questions, but I will start out with what do you envision your duties to be as the Interim CEO of the corporation? John Patenaude My duties as I view it is to keep the company going. What the company will be faced with is there will be a group of new, a board of directors, also there will be executives, which are being transitioned out of the company and executives who have to take on a larger role within the company. My role is: 1) to make sure that customers are still taken care, 2) employees are still taken care of, and 3) to make sure that the cash flow is sufficient to pay back the City its debt while we are there. The other items which I view as part of the duties are really to establish short-term and long-term goals and strategies for the company and also to help transition management from a for profit endeavor to a it is not a not for profit, but it is really for the ratepayer and the City endeavor. That will be part of the duties. Also I would view it as one of the things that I see lacking at Pennichuck is really a succession planning relative to executives, and I would view it as part of the duties to help establish that going forward. Chairman Clemons Okay. Kind of segways into one of my other questions, which is how do you envision the makeup of the management team or your management team? Do you have particular individuals in mind, do you have… Personnel – 2/10/11 Page 6 John Patenaude The management team will still be a COO, somebody that is in charge of all of the operations and makes sure everything works. Also the management team will have a financial individual. We need financial statements, financing. The other person that is staying on for a short period of time is the VP of Administration. That position has to be assessed relative to the tiered players underneath that position; are they strong enough that we can change leadership around or does that person have to be replaced on a like kind basis. It is still too early to tell. Then, as you know, the CEO would be leaving. The CFO replaced by the controller. The general counsel will be leaving, and I believe we can outsource that position on a cheaper basis. Also the VP of administration has indicated that she wants to leave after a 6 month period of time. I view that as really you have a strong COO, the controller I think we can work with to become not only an accountant but a financial person for transactions and lending/borrowing, and then the customer service, I.T., and or the regulatory affairs. Those need to be assessed. I can’t tell you today whether those individuals are ready to move up or not. Chairman Clemons Is this something that you are working on with the, or how do you envision prior to the acquisition, the transition over in your role. Assuming that we appoint you to this position and you get this position, how do you foresee the interim months while we are at the PUC and afterwards? What is your role going to be? John Patenaude I wouldn’t view my role as changing from what it is today until the City actually acquires the company. We have had discussions with the COO and the VP of Administration and the CFO so we have done some homework there, but the actual position of Interim CEO will not take place until the acquisition is completed. Right now the focus is really to go through the PUC, go through financing to complete the acquisition. Chairman Clemons I am going to ask one other question and I will move along to other members. This is an interim position. How long do you plan to serve? John Patenaude Really serve at the board’s request so if it is 6 months, a year, it is up to the board how long they want me to serve. As I have indicated to the Mayor, I am not looking for a severance package here; I’m not looking for that at all. This is being done so that you have a successful transaction and a successful business after the completion of the transaction. On an interim basis what we want to make sure is that the right people are in the right place and that the board has the opportunity to make decisions relative to people and the business. Chairman Clemons Thank you. I will open it up to the committee. Alderman Craffey Thank you Mr. Chairman. I see through your resume you have a lot of experience on the financial side. Could you tell me what your leadership style is like and how is it going to affect… Personnel – 2/10/11 Page 7 John Patenaude My leadership style is really to work with the teams. I am a firm believer that people need to be trained. I had a controller that worked for me when I was CFO and I always told her that if I get hit by the bus you are trained to take my position. I’m a firm believe of that. I think that people have to be trained so that whoever it is that takes my place is ready to take my place and not scared to do it. It is training people, but also being ready to make hard decisions if hard decisions have to be made. I do believe in team work and also developing teams that work together, not as individuals but as a team so that the company moves ahead together as a unit. Alderman Craffey Thank you. This is a leadership position that we are asking you to take over, and it sounds like you are a team builder. I guess what I am looking for from your resume, I don’t see anything where you have actually been a leader of a large group and been the focal point. The CEO is the face of the company. I don’t see from your experience anything like that; it has always been at a sub-level. John Patenaude As a CFO really the CEO and I were partners relative to the management of Nashua Corp. It wasn’t he alone or myself alone on the financial side, we were partners, and that wasn’t only the last CEO but the CEO before that. We made decisions together. We sometimes agreed and sometimes disagreed, but decisions were made, and as the financial person I was the head of the financial group, I was the face to the market as well as to our lenders. That was a leadership role relative to the company. Alderman Craffey That is all I have for now. Thank you. Alderman Vitale Maybe a follow up to Alderman Clemons’ question before where you were talking about people that would be leaving and new people joining the company and maybe switching people around. Within your self or how you would build that team that you would probably use to bring in the proper people into the company? John Patenaude First of all let me say that it would be the intent to try to work with people that are there today and assessing their skill set and trying to get them to a place where they would be available to move up. If they can’t contribute in that nature or some people become very uncomfortable when they have to go outside of sort of their safety zone, and I think as leaders we always have to go outside of our safety zone, we have to look outside to move ahead. If those people can’t do that then we have to assess and see if there are people that would be a better fit within the company and take the appropriate action, but it is not something that has been cast in concrete today. The best result would be to use people that are inside the company today and give them more responsibility and give them the tools to work with. Alderman Vitale That is good for now. Personnel – 2/10/11 Page 8 Alderman Flynn I worked for Nashua Corporation with you for all of those 18 years I am sure although I doubt that we have really had 18 conversations in those 18 years. I do appreciate what you did for Nashua Corporation while you were there. I certainly knew the difficulties that the company was going through and the kind of decisions that you were involved in. I’m not convinced tonight, I’m not going to stop anything tonight, but I’m not convinced in my sole that we really need to make this decision tonight on who is going to fill this position. I guess I am going to kind of back my way into that question by asking could you or, hopefully it would be you, but I am sure you understand this as well, but it could be anybody else, if we decide that you are the right person for this position tonight, do we have a recall mechanism or a way to back peddle on this as things go along? In other words, the City is going to make an appointment, and you wouldn’t become the CEO apparently until the actual acquisition happened, although I am assuming that would be part of the motion tonight or part of the motion before the Board of Aldermen that we don’t nominate you as the CEO, but we nominate you condition upon the acquisition, but at some point if we change our mind or see another candidate or there are things that transpire that we are just not really comfortable with, what choice do we have now that we have cast our vote? John Patenaude When I took the consulting job I told the Mayor you can let me go any time you feel like it or if I feel like walking I can walk as well. The same applies here I believe in my mind, that if you are not comfortable, if you were to vote and say yes and then 6 months from now you feel uncomfortable and as a board you feel that I shouldn’t be the interim CEO that is your choice and that is fine. It is up to you. Chairman Clemons Mayor Lozeau would you like to answer that? Mayor Lozeau Could I just add to that? Alderman Flynn I would hope you would. Mayor Lozeau This is a hire. It is not an appointment that you would rescind. If we are not satisfied for whatever reason we certainly have some prerogative there. I think what is important for us to all understand is one of the reasons that we are coming forward now instead of after the acquisition is because it goes an awfully long way for people to understand who is going to be leading the company and working with us, and when we go to the PUC and we present all of our information, it is a good thing for them to see that we have a plan and that we have somebody that they can have some faith in that they will be able to do this work, and that it is not going to be a hiring process at the end when the acquisition is done, it is a known entity. As we have been working as a team, as I mentioned earlier, Mr. Patenaude has been working with the staff at Pennichuck that makes a difference. As we go to all of those communities and speak to them about what we are doing, as we have met with the water district group, Mr. Patenaude has been there. It is very helpful to do that. It is calming to people to feel like we have a plan and things are well in hand. That is why I chose to bring him sooner in the process rather than later. Alderman Flynn Personnel – 2/10/11 Page 9 That question was not really meant to be a display of my lack of trust in you. This is something new for us as a board to be kind of hiring someone for an entity like this that is not a city department. This committee doesn’t usually get involved in this kind of thing. It is just a little unclear to me; I think after the acquisition is done I think the day after the acquisition is done, I think those decisions on whether you remain or don’t remain are going to be driven by the board of directors. John Patenaude That is correct. Alderman Flynn We won’t have control over that any longer. John Patenaude Right. Alderman Flynn So we need to be aware of what we’re voting on. At least at the point of the acquisition I think we lose control over that. You are the most wondrous fellow in the world, but I just want to recognize that as a board what we really do or continue to have or what controls we don’t have after we take this vote. One of the things that you talked about was I think you were talking about if you didn’t want me to serve I certainly am not going to try to force the issue, you hired me you are going to have to get rid of me, you are going to have to follow the process, but are there any, I imagine there is always unforeseen circumstances, but are there any circumstances that you have thought about that you might not want to follow through with this position based on things that you have thought about might come forward either through the PUC or through the elective process or changes that would be made that you wouldn’t want to be CEO? John Patenaude It was interesting because when I started this process back in June it was a different process then than what this is, and it was intriguing to me. That is why I got into it. I have been through this all along through the negotiations and through the financing and filings and everything, and I would say today there is probably nothing that would scare me off today. There is always the unknown. You have to deal with the unknown and I am ready to deal with that. I am sure something will come up day 1 that we didn’t know about and you have to deal with it. That is part of being that executive you have to deal with the unknowns as well as the knowns. There is nothing that scares me today. I wouldn’t be here I think if I was afraid to do the job or if there was something overhanging that would bother me that much. Today there is nothing that I foresee that would drive me away from the job or scare me away from the job. Alderman Flynn One of the possibilities…I know how I am going to vote, I certainly support the Mayor, but if we had a different Mayor would that change your feelings? I think once you are the CEO it is no longer a political position. Personnel – 2/10/11 Page 10 John Patenaude That is correct. Alderman Flynn So I would think that you have thought about that and that certainly is something you have deal with. John Patenaude The way I view it is I will be working for a board of directors whether it is 7 or 13 individuals. That is always a challenge. Throughout my career that has been a challenge because each member has a different personality, has different wants and needs relative to the company and you are aware of that Alderman Flynn. That is part of the challenge and I think that is why being in the interim is very important because that is the challenge between management and the board to make sure there is a connection there and that connection is made properly so that going forward the board has a good understanding of the company and what is going on with the company and they can make good decisions versus having no connection or not knowing what is going on with the company. I think that is very important, and in dealing with boards in the past that has been important to have that connection between management and the board. And it is not only the CEO connection with the board it is the importance to have the COO, to have people within the company connected so the board knows who to talk to; if they see a problem it is not only the CEO, they should let the CEO know, but they also should bring the COO or whoever is involved with that particular organization that they can deal with. That is the importance there. Alderman Flynn One of the things that you are very very aware of, I have spoken about it a number of times, I think the board is very consistent with it, is the money that has been spent thus far on the acquisition through Pennichuck, the $5 million or $6 million that we have been talking about trying to return to us. I’m assuming we are going to get that money, but if the PUC for some reason or I don’t know why the PUC would resist that, but if the PUC didn’t give us that money or didn’t give us the full $6 million as something that we could do under the transaction to repay the City, have you thought about, knowing the board’s position, have you thought about is there anything that you could do as the CEO to, after the fact, some strategy or some steps that could be taken to have the corporation return those funds to the City? John Patenaude As you know, there are two unregulated companies within that group and some of the cash generated by those two unregulated companies could be distributed back in some form or fashion to give relief on some of those expenditures that have been incurred in the eminent domain process. I think that is one way of getting the money back. I think there are possibly other ways as well; there are real estate transactions for instance that are going on before the close, there will be cash there, and I think the cash could very well be utilized to help service some of that debt. Maybe not the whole thing, but at least some of it. Going forward, to the extent you have the unregulated companies, any profits generated by them I think could be directed back to the City. I would have to check with counsel, but that would be a way of doing it. Alderman Flynn Would you think we would consider as we have members come forward for the board of directors that we try to look favorably on those that favor that position as well to give you that same kind of encouragement? How would we continue to move that forward? John Patenaude Personnel – 2/10/11 Page 11 I think part of the interim CEO’s job is really going to have to be looking at needs that we have discussed here as a group over the last 8 months and also incorporating that, helping the board understand those needs. I would hope that the board, the board serves at your, you vote for the board as well so I think there are two ways of getting there is really influence from the CEO relative to recommendations and also from this board in a sense of making sure that people understand that is one of the items you are looking at. Clearly it is an item in the PUC filing so people will be aware that it is there. I am sure that will be discussed. Alderman Flynn One thing that you said I wrote down earlier is you said your focus would be the customer, I think this is what you said, I kind of was rushing it fast, but the customer, the employee, and cash flow. Cash flow meaning that you wanted to provide good quality water and keep the rate down for the water users. One of the things that we factored in when we came up with this plan for financial sense was this; I think there was like $8 million for capital projects every year. If I envision this right the $8 million was something that I don’t think we know what the specific projects are that we are going to spend that on, I think there is going to be a plan put together and some priorities will have to be given just like any capital plan to decide if all of the monies are going to be fully expended or not correct? John Patenaude That is correct. Alderman Flynn One of the decisions on fully expending that capital will be if we can’t keep the water rate down then we will have to figure out some avenues for revenue to keep the water rate down. Would that be something that the board of directors would champion or you would champion over the first three years, those first three critical years? John Patenaude Management has to come up with a plan, and one of the things in our due-diligence, one of the things Beck indicated was while there were short-term plans, capital expense, there were no long-term plans for capital expense. And part of that is driven by this eminent domain proceeding that has been going on with the City that the management team has had a short-term focus because of that, only because they didn’t know where they were going in the long-term, but I think there needs to be a longer term plan to look at what are the needs and that is by community, by company, what are the needs and you have to rate them; do they have to be done today, tomorrow, or this year, or can they wait a year. No different than a manufacturing company does for instance to say okay we have expectations; this machine needs repair but it can go another 6 months or a year, how do we do that. I think that is management’s job to put that together. The final expenditures have to be approved by the board of directors. It has to be a plan that is approved by them and if there are changes to the plan they have to be approved by them as well. It has to make financial sense. It is not just we have to spend the money it is does it make sense to do this and what is the rate of return if we do it and what happens if we don’t do it. Alderman Flynn Well we make those, we don’t really make them the Mayor makes those through her budget recommendations, but those are tough decisions to make; what you can or can’t afford to replace. Sometimes you have to. Just like I do with my Camry, I keep my Camry on the road somehow rather than coming up with another huge expense. This $8 million, I guess the priority is going to be water quality and water rates. That is going to be Personnel – 2/10/11 Page 12 the priority I am sure that you are going to set correct? John Patenaude Well it has to be, doesn’t need to be done right away, is it required/mandated, whether it is quality or is it broken, what do you need to do. In this plan it has to be somewhat flexible from my understanding because there are times when if for instance I have been given the example if the City digs up for the sewer and the water pipe there should be replaced why go in twice so then they shift things around to make it work so it is not as expensive, you don’t have to re-dig the streets and whatever so there is a sharing of costs there. There is some flexibility there, but overall I think that in general the plans, you would have to put plans together. The one thing that we have discussed as a team is really sort of these advisory groups from the various communities because I don’t think that the company necessarily, if there is a half a million dollar project they sit down with a town. They may decide to do it with the town or if they do it I don’t think there is an expectation to the ratepayers to say we have to do this, but it is going to cost you and here is what it is going to cost you and here is the rate setting process. Some of the towns that I was involved with in the meetings there was some discussion about the rates, and it was the rates are very high and what are you going to do about it, but I don’t think there was a basic understanding of how the rates got formulated. I will give you an example; if the town went up on its real estate tax three times in one year, went up 300%, there was an expectation that yeah you just eat it and so what, but it goes to the ratepayers so there is an impact here because the operating expenses have to be covered. I think there has to be more work done with the communities so that they understand what the process is to make rates and also what the impact is of expenses. Alderman Flynn Mayor when we reached towards the end of this whole process coming out with the actual offer, the Definitive Merger Agreement, there was a caution that we were still to be, there were some things that we weren’t going to talk about quite yet, they were items that had been looked at under due-diligence, but at some point everything would be fully public. Where does that line come up where we can talk about anything? Mayor Lozeau As soon as all of the information is filed with the PUC it will become public information and can be discussed. Alderman Flynn And when will that be? Is that like a month away or… John Patenaude Within the next week and a half or two weeks. I should say though there is still some financial information that we can’t disclose because it is not a PUC issue it is really more of an SEC issue. For instance budgets; their projections and so forth. We can’t talk about that. There are also some items that were in due-diligence that are not in the public domain that are still under the Confidentiality Agreement, confidential so we have to be careful there. Personnel – 2/10/11 Page 13 Alderman Flynn Very shortly everything will be fully in the open? Mayor Lozeau The things that I believe that this board would like to talk about will be in the PUC filings and your comfort zone will change on what you can talk about. The items that Mr. Patenaude is talking about are things that I think we took in some consideration during due-diligence, but I don’t think they are usually impactful to the discussion that you are going to want to have going forward. Alderman Flynn I don’t think they would be the kind of things I would be talking about. All of the things Alderman Chasse talked about, I wasn’t going to talk about any of those. I’m all set for now. Thank you. Alderman Tabacsko This was actually earlier in the questioning, it seemed to fit in. I just wanted to get some clarification on can you describe Mr. Patenaude how you see your role in the selection of the board of directors or the recruiting or do you have a role in that? John Patenaude That is really up to the Mayor, but I would think that the role would be probably having some discussions with the individuals. I wouldn’t make recommendations; I would hate to make a recommendation relative to my future employer or boss. Alderman Tabacsko What struck me is that you could be in a position as transaction executive and interim elect and not there yet and have a conflict a little bit. John Patenaude Right. No I wouldn’t want to put myself in a conflicted area. Alderman Tabacsko Thank you. Mayor Lozeau Mr. Chairman, I would just add to that what I have for expectations from Mr. Patenaude as it relates to the board of directors is the discussion that we have been having on the executive management team, which is what are the skill sets we are looking for, how do we want to develop that board, and as I have been in the communities that we have been talking in and encouraging them and telling them what different disciplines we would be looking for at the table, Mr. Patenaude has participated in that, but as he said making recommendations on specific individuals I think would not be in our best interest as his employer. Personnel – 2/10/11 Page 14 Alderman Melizzi-Golja Thank you. Mr. Patenaude I have a question about the other end of the transition. First of all I have to say I am happy to hear that you want this only as an interim and don’t want to continue because I always have problems with interims who want to go on and apply for the job. But in looking at your relationship with the board of directors, what do you see your role being in helping them make a decision around when everything is ready to hire a new person? John Patenaude I think the board would have to make a decision whether an internal person fits their role or not and if it doesn’t then I would clearly help them either recruit or help them with that decision process. Clearly wouldn’t make the decision, but I clearly could help them either recruit or help them have discussions relative to the individuals that would qualify internally. Alderman Melizzi-Golja Thank you. Alderman Cox Thank you Mr. Chairman. First I would like to echo the Mayor’s remarks upon your introduction, and then congratulate and thank you for the stellar job you have done bringing us to this point. My question, we have put at the top a lot, there has been a lot of jabs, stabs, and criticisms to the hierarchy of Pennichuck through many of our discussions, but not to the working staff that have done a great job running that company day in and day out. Could you speak a little bit to the human resource section that is going to be so important because you have some people who have committed and it is not a demanding commitment, they may leave when the hierarchy, and then for continuity bringing that working staff through a…it is a difficult transition for them. They are very nervous and wondering how it is going to move forward. John Patenaude I think that the second tier working staff is okay. There are some holes that I know of that need to be filled based on discussions with managers there. But clearly I think that is an important, as I was thinking through what do you do the first week on the job so to speak; one of the first things you have to do is get out to the employees and let them know that you are human and that you are there so that they know there is somebody in charge and there is somebody they can talk to if they have to talk to. I think that is important. You don’t want people leaving in mid stream just because nobody paid attention. I have seen that in other companies both bought and sold where good employees have left because their perception was nobody cared. I think it is important that the interim CEO get out there and at least talk to the employees initially and then continue dialogue on an as needed basis. That is important. But there are holes in the human resource side, but in general the next tier down they are good people and I think they work hard and they want to make sure that somebody loves them you know, somebody wants to take care of them. That will be the number one factor. Alderman Cox Thank you. Not to plug a TV show, but you can’t point out enough if anybody has watched the undercover boss the CEO knows the absolute top 1/3 and doesn’t have a clue about the bottom 2/3. Personnel – 2/10/11 Page 15 John Patenaude Exactly. Alderman Cox That is very important. The men and women that have worked there have done a great job and moving forward we would love to keep the continuity and keep them confident and comfortable to how we are moving forward. Again, I think we have the perfect person in place that knows from soup to nuts how to do that. Thank you. Alderman Vitale Maybe as a follow-up to Alderman Cox, I like to do those follow-up questions. You were talking about doing some internal work with the employees on assuring them moving forward. How do you see it working also after acquisition as far as reassuring the community of Nashua and the other users of the system what is being planned going forward and community with the community at large? John Patenaude I think that is important as I was saying before especially in the rate making process or in capital investments. I think it is important that the communities know what is going on and understand what is going on. Some of the communities I visited in the past few months really have, some communities have said our water systems need some work, didn’t know if you were aware of that, and by the way our rates are too high. There is a disconnect there to say okay how do you balance that. I think there has to be meetings with individuals to say, and they are not necessarily easy meetings because sometimes people they hear what they want to hear, but the meetings have to be about if you want this fixed what is it going to cost you, and maybe it costs you nothing because it is already covered in the rates, maybe it costs you something because it is not covered in the rates, and your future rates will be impacted because of this. There has to be that kind of dialogue I believe, and in some communities it is apparent that it wasn’t happening. In other communities though it was. It is kind of difficult. It is a balance and we will have to work on that. Chairman Clemons I actually want to just ask one question; one of the concerns that have been raised by some members of the board have been that we didn’t do a full search for an interim CEO and so I guess I would like to hear in your terms why it is in our best interest not to do that, and to hire you. John Patenaude I think one of the things we talk about is the employees and on an interim basis a lot of the senior management know me. I think by being an interim interim and I mean that sincerely, I am not here for the long term. I enjoyed retirement actually for a few months. But I’m not a threat to them. They know that I am there for a period of time at the board’s command and then I will be gone. If they feel that they have a shot at being the next CEO then I am less of a threat to them. I have some insight in the company. Somebody might not be able to bring that if they are a new hire. They may want to be not interim but a forever type of CEO. There is never forever, but for a long term I should say, CEO. The fact that somebody coming cold not knowing the business or maybe they know the water business but they don’t know the people, would make it more difficult. Again, this is an interim position. The board can make up its mind after if it is a 6 month, year, or less or two years, whatever they want, I am perfectly fine with that and they can make their decision as to how they want the leadership of the company to continue. I think it is more difficult if you try to hire an interim CEO up front. Somebody that has never worked on a Personnel – 2/10/11 Page 16 transaction would probably have a hard time and probably wouldn’t want to do it on an interim basis. Just my thoughts. Chairman Clemons Thank you. Alderman Cookson Thank you. We have talked a lot about what you would do as an interim CEO, but I would like to take a step back actually and start with what you would perceive or describe as some of your achievements throughout your career. John Patenaude Actually my career has been varied, but really my last position as CFO was the outstanding side. We took a company that was in financial trouble, we had to dissect the company, sort of pull it apart and bring it back to its root on the paper side, we had to deal with financing, and I think a couple of CEOs and myself we built a strong company with a strong leadership within the company. That has been one. When I was in my previous life as a consultant for Coopers & Lybrand I worked with some major companies; Raytheon being one, Lotus, which is now owned by IBM, Kendall Karp, which is now part of Tyco so we helped them with their tax strategies and helped them move ahead. My company with Ausimont, N.V. was really interesting because I came in as a tax director and when you came out of a large company, Sanders, and I had the opportunity to become more of an entrepreneur and the move towards doing acquisitions and completing acquisitions and really whether it meant kicking the tires myself; going out to chemical plants, parts of chemical plants so we did some major acquisitions there, which I was a part of. In the Nashua side, I am the person who negotiated the sale of the photo finishing business, which was about a $600 million business back in 1998. Actually sold other businesses prior to that: I sold a duct tape business out in Watervliet, NY in ’96. Then I have helped with the acquisition of a company called Writtenhouse back in 2000, which brought the company from about $150 million to roughly $300 million at that time. I have been involved in all of that and sort of lead the company through its financial side both in good times and bad times, which is always a challenge. When we sold the company in 2009, on the day we sold we had no bank debt so that was a challenge in itself when you get through that. Those are some of the challenges and some of the successes. Mayor Lozeau Mr. Chairman I don’t think John is thinking about this, but Alderman Cookson I would also say for your consideration that we have a negotiated settlement and John played a key role in making that happen so that is a very recent but very powerful accomplishment. Alderman Cookson Thank you. Could you then describe a decision that you made that was a failure and why it happened and what happened and why? John Patenaude Actually I was involved with a smaller acquisition part of my time being a CFO in it. It didn’t go well and mainly two things; 1) there wasn’t enough attention paid to the people side and 2) there were items hidden in the transaction that we didn’t see. I have gone through that side of it. The way that I view my job I guess is not through yea I did this or I didn’t do this, it is really my job is I guess I don’t view myself as an accolade kind of Personnel – 2/10/11 Page 17 guy, I have a job to do and I do it. You give me a job to do and I will do it. Sometimes you fail and sometimes you win. I have had more wins than failures over my lifetime. But I view that it is part of the job. I always had this discussion with my bosses over the years about especially if you have metrics where on a bonus plan you say it is part of my job to do X, Y, and Z, I am not going to not do it, it is part of my job, so therefore compensation is a different issue. One of the successes I had was at Nashua Corp. towards the last few years I implemented a rolling forecast because the budget process itself is one that is geared towards compensation in reality, and I always wanted to know where I was at any point in time 12 months out, and if I didn’t do that you tend to do a budget and then you get to December and then you are looking 12 months out, but I don’t know where I am in June 12 months out. I instituted that. There were hiccups to it and it is not a perfect metric, but certainly you want to know where your cash is going to be 12 months out and you want to know what issues or expenses are at 12 months out. That is one of the things I put in. That is every day, it is just running the business day by day and you want to know where you are at and you have to look outside the box. People tend to be very comfortable in their comfort zone and sometimes you have to break that comfort zone. One of the things early on in my career I had things thrust upon me without instruction of say okay you can do this or you can’t do that so I learned very quickly you make decisions and you live and die by them, but you make decisions. You have to and if you don’t you are not a good manager. That is part of my philosophy in management. Alderman Cookson Thank you. I just want to put some sort of timeframe around that. You said prior to you being a CFO you were part of an acquisition that didn’t go well because you didn’t attend to the people side, and if I look at your resume that would have been prior to 1998? John Patenaude Yes. Alderman Cookson And so since 1998 you wouldn’t… John Patenaude You learn from your mistakes. Alderman Cookson You learn from your mistakes so you haven’t made many mistakes in the past… John Patenaude We always make some mistakes, but at the end of the day you look at where am I today. I don’t think you would be human if you didn’t make mistakes. I make mistakes every day. My wife tells me so. It is different than failing totally. I guess I don’t look at my career and say I failed here and I won here. What I do look at is I say I learned from this mistake and I won’t let it happen again. Alderman Cookson So why don’t you give us a few examples of where you have learned from your mistakes? It could be a more Personnel – 2/10/11 Page 18 recent example. John Patenaude Dealing with investors for instance. I had to get out of my comfort zone. Public speaking and dealing with investors one on one especially certain investors I was out of my comfort zone, but I learned quickly that you have to listen and you can’t just go out there and be a bull in a china shop so to speak, and especially those are difficult discussions you have when a company is not doing well, and you have investors that are saying why. I quickly learned that honesty is the best policy. You tell them the truth and while they may not like it, they understand. I never lied to them, but it was difficult because sometimes people you know you hear about spin and people try to say well why don’t you spin it this way or that way, and if you have bad news it is bad news no matter how you spin it. I learned early on in being in investor relations that spin doesn’t work that well, just be honest and truthful and work your way through it. A person may not like you or a person may respect you for doing that. But those are difficult decisions to deal with and they are difficult but you learn from them and you move on. Alderman Cookson Thank you. What do you think some of your harshest critics might be saying about you or may say about you? John Patenaude Some of the harshest critics might say that I am tough. Sometimes I tend to come on strong and maybe Alderman Flynn has heard this in some of the divisions that some people were afraid of me, and actually people who worked for me for a number of years came back from divisions, I hired them up from divisions, and said ah you are nothing like what we thought you were when we were in divisions. People get the impression, but sometimes you have to be tough, and you have to make hard decisions. You have to do it and people sometimes take it to heart and it is not. A lot of people would say I am tough and sometimes hard, but you have to deal with what you are dealt with. Alderman Cookson This acquisition usually you talk about mergers and acquisitions, this is more of an acquisition and there are some things that are certainly different about this acquisition than there are with others that you might have been involved with earlier. This one really isn’t the acclimating of a different culture into another company. You’ve got a whole company or as whole as it can be so what are the challenges that you are finding with this particular acquisition with the culture? John Patenaude I think the culture here is more of people have been concerned for five years, six years, however long the eminent domain has been going on. They have been concerned about their jobs. People have been very focused on the short term versus the long term. From that aspect the culture is one of very narrow short term decision process. I think that can be changed and dealt with. The other piece of it is and this is my perception, that people have been focused in on shareholder profitability, which they should be because that is their job. Now we have to change their thinking into customer or ratepayers are the important ones here and the repayment of the debt. That is where you get back to meeting with communities and more meetings and getting them to understand what is going on within the company and also helping the company understand does this make sense because when you talk to somebody in a community about for instance a capital expenditure job they may say it is nice, but we don’t think you need it. We need to have those communications so that might be one of the tough points here. Keeping employees looking out longer term and also working more with communities and Personnel – 2/10/11 Page 19 ratepayers to understand what are their needs; what are the perceived needs and what are the true needs of the community and working that out. Alderman Cookson Can you tell me what some of the qualities you feel that a successful interim CEO would have? John Patenaude I think the person has got to be able to listen and understand, but also be able to make decisions. Understanding part of the business is helpful, but also the person has to be able to work with the board and also with management on both sides here bridging the gap. That is a quality, and part of that is listening; what are the needs, what do you want, what do we need as a company, and not saying I have all of the answers because I can tell you today I don’t have all of the answers and I would hope that the board would help the company out, and that is part of the helping people understand in the management positions as well that they don’t individually have all of the answers either and they have to work as a team to get the answers so that they are all on the same page working together. Alderman Cookson You have talked about listening and knowing what the needs are of the surrounding communities. One of the concerns that I initially had was back on December 16th there was a presentation that was delivered to Merrimack and during the course of that presentation what was presented to the Board of Selectmen was the rationale that was presented to this Board of Aldermen in Nashua as to why we should support the acquisition of Pennichuck. What do you think was missing in that presentation and what would you do differently? John Patenaude Part of the process as I saw it or the team saw it was also get information from the communities to see what their concerns were. There were clearly some discussions relative to Anheuser Busch, which we could not bring up. Pennichuck, they were clear that was under the confidentiality agreement we couldn’t discuss that. That was a major concern of their board, but we just couldn’t address that in any presentation. The rates are a concern to them I believe. What we were trying to do is give an overview of the total presentation; where the City was going and where the company was going, but also give them an opportunity to come back to us and say we’re really concerned about this. We tried to address, in every community people have talked about what is the governance here. There is a big concern about governance and we tried to address that. Rates; everybody is concerned about rates and we tried to address that as much as possible. Those are the two major items that we saw. Each community has their own little issues. Merrimack’s happened to be the Anheuser Busch plant. Other communities came back to us, for instance, in Milford Pennichuck supplies water at a higher than X elevation and they were concerned about that. We were able to address that. In Conway there was a concern about water quality being supplied to their constituents and we talked about that and that is where we got some of the information that there may be other work being done there. It wasn’t just us presenting, we were trying to get information from the communities to help us out to say what do we need to do. That is why I say that is Personnel – 2/10/11 Page 20 where I got; from listening to all of these conversations of we need to have more discourse with these communities and not just once a year. It has to be something more than that, and also having an advisory board to help us through this process. Alderman Cookson So you as the transaction executive in meeting with these different communities, and I understand that there was a team involved, but you were I would consider a point person as that transaction executive, my perception because I was able to participate or at least view the presentation, do you see any fault or any error in the presentation that was delivered to that community in the information that was delivered to it? John Patenaude I don’t think I see any errors there. I think it was a general overview of the transaction and that is what we were trying to get to. We were trying to keep it at the 50,000 foot level and see if there were any other concerns relative to their particular community. Alderman Cookson Okay. Thank you. Mayor Lozeau Mr. Chairman, Alderman Cookson if I could, that evening you and I spoke after that meeting and the suggestion that you brought forward as somebody that had the ability to be looking at it from a distance and watching people’s response to it was you said I think it would be important if you put a slide in there that talked a little bit specifically to the communities about what is in it for them, and I told you that night that I thought that was a good idea and that we would go back and look at doing that, and we have done some of it. Because you brought it up, it is a good opportunity for me to say that I thought a lot about it and as you know I have been doing the presentation now because as we talked about it we realized that it might be more effective for an elected official to be talking to other elected officials, and that is something that the team talked about doing and so I have been doing the presentation. But as I have thought about the you know what is in it for me information versus the same information we gave this group, it has been pretty compelling to present the same information time and time again because in the final analysis while a community might have some parochial view about what is in it for us, the bigger message here is that we are in this together and this really big picture, this big decision that Nashua has been out there out front doing, is really what you should be thinking about. Alderman Cookson I appreciate you bringing that up because that is exactly the point, and it doesn’t matter that I was sitting back in the audience watching from a distance, the fact is that the target audience was missed in this particular instance. You delivered information that was delivered to this Board of Aldermen that was intended to help us make a decision as to whether we should move forward with this acquisition or not versus delivering it to another community. While I will subscribe that some of the information was appropriate, the target audience was not reached. Mayor Lozeau Actually, if I could, I mean I don’t want to debate this, but… Alderman Cookson Personnel – 2/10/11 Page 21 Please, no. Mayor Lozeau No, I just think it is important because we are still doing this. Last night for example I was in Bedford. Bedford has a very different perspective than Merrimack. Bedford put $40,000 on the table and got on board with us going for eminent domain. The point I was trying to make Alderman Cookson is I really don’t think we missed the mark. The biggest point in Merrimack was the Anheuser Busch information, which as we said couldn’t happen. When you approached me at the end of that meeting and brought that up I left there thinking boy you are right, but what I think the conclusion I am trying to tell you is the substance of our presentation is still the same and it is right to be the same because that target audience ought to be getting on board with should we be protecting the watershed, should we be delivering quality water, should we be able to pay for it, are we going to invest in the system, what is in it for the long-term, what does it mean to the ratepayers, and that is what our presentation is time and time again even though there are different questions. Alderman Cookson I appreciate that. I have some other questions for Mr. Patenaude and we can continue this conversation another time. Thank you. I would be interested in knowing why you think you would be successful in this job as interim CEO. John Patenaude I think I have learned about the company in the last 8 months, I have seen what the needs are, some of the needs not all of the needs, and I think I can work with the individuals, the staff there to make it work, and also bridge the gap with the directors whoever the directors are. I think I have those skill sets that I can do that. I have been successful in a much larger company. This is roughly a $35 million to $40 million company. It has the same issues as larger companies except on a smaller scale. I think I have the experience to bridge the gap. Alderman Cookson How are you going to measure your success? John Patenaude I will measure my success that if when I leave I have resolved some problems because some problems take longer than whatever time I am there and that the board chooses a good strong leader after I leave and with my assistance. That will be how I would be measured I believe. Alderman Cookson I have two last questions. I would be interested in knowing why you shouldn’t be confirmed as Interim CEO of Pennichuck. John Patenaude I guess if you felt uncomfortable, if you felt that I couldn’t do the job then I shouldn’t be confirmed. I think it is Personnel – 2/10/11 Page 22 as simple as that. If you think I can do the job or if you feel comfortable fine, if you don’t then don’t confirm me. Alderman Cookson And then what salary do you think you deserve as Interim CEO? John Patenaude One hundred and ninety thousand. Alderman Cookson Okay. Thank you. Alderman Craffey In you remarks, you said something about succession planning and then as part of your management team makeup you have assessments. What guidelines are you going to use? Are you going to use existing job descriptions, are you going to re-write job descriptions? John Patenaude I think some of the job descriptions, for instance COO, are existing. I think we have to look at, as people leave, what the job requirements are and what are the needs, and if the job description has to change it has to change. For instance, if the VP of Administration leaves and to replace her you have to look at who are her direct reports, where they fit in within the organization, are they strong enough to lead without a VP in charge of them and who should they report to. That has to be assessed. Alderman Craffey Your succession plan you talked about it, but how are you going to set it up? This is something unique and we are actually hiring an interim CEO before the board of directors is in place. Really the only people you have to report to are the shareholders, which is this board to start with. How do you see the succession planning being drawn up? Are you going to flatten the organization or is … John Patenaude Succession planning in my mind is that after you get the organization to where we think we have already got plans and we have made that public of people leaving, it is really for instance the COO, who is going to replace him, does he have somebody in mind that he is training to replace him and how is he working that; is he working with that person every day. Right now I bet if you were to ask him he would go outside and hire somebody, and I am not sure that is the right answer. I think if you’ve got good people in house you ought to be training them and you ought to be making them ready to take over your job. I am a firm believer that if I am training the person beyond me they ought to be able to take my job over almost flawlessly and work through it. Everybody that is there ought to be training their successor. Sometimes there is fear about that. Sometimes people are afraid to do that because they think you are setting them up to be replaced. That is not the case. You want people to move up. The only way you move up is really by training the person behind you to take your place. That is what I mean by succession. Personnel – 2/10/11 Page 23 Alderman Craffey That is a philosophy I actually believe in; train your replacement, as soon as you are hired you look out and you find somebody that is going to replace you and you train them. That is a good way to go for succession planning, hiring from the inside out. Again, just so I am clear, on your H.R. side, this is going to be a public company that was traded and now it is going to be basically a private company owned by the City of Nashua. The job descriptions are you going to review them or how is that going to go through because there are different aspects. John Patenaude There are different skill sets required, but yet in certain positions there are the same skill sets. For instance an H.R. Director for instance would have similar skill sets whether you have a private company or a publicly traded company, COO, same skill sets. It is a matter of the team looking at the job descriptions and making sure they fit the company or how you are going to manage the company in the future. Alderman Craffey So am I to understand that you are going to develop your own team within the company once the PUC gives its blessing…who are you going to report to… John Patenaude There is already a team there basically and people know who is leading. Again, the interim CEO will not take over until they acquire the company. If I was a publicly traded company I wouldn’t let you in until that happened anyway because it is not over until it is over. In the meantime, you can be talking to people, and pushing through that. Alderman Craffey I understand that point of view. I guess my question really is, once the PUC says we have acquired the company, we have gone through everything, we have bonded the money, acquired all of the outstanding shares that the board of directors would be dissolved correct? John Patenaude Once the company is acquired right. Alderman Craffey My question is you as the interim CEO who do you report to? John Patenaude Under the Bylaws and the Charter you will have in there a board that is already constituted so I will be reporting to that or whoever it is will be reporting to that board. Before you close the transaction you will need to have the directors in place. Alderman Craffey We’re basically going tonight, I mean nothing is permanent on this, but we are going to be approving or disapproving a recommendation for an interim CEO before we hire the board. Now once we hire the board and acquire the company, we have no more power over to take the interim CEO out. Say we don’t like the way Personnel – 2/10/11 Page 24 that you are going, it would have to be the board of directors. John Patenaude They can take me out yes. Alderman Craffey So this is a very big decision for all of the Aldermen to make in which they should have to think and look to the future and make sure that you are the right candidate and that we hire the correct people. My question I guess is if you take the interim CEO position, if you get approved by the board, will you have any direction in picking the existing board of directors that you would report to? I see that as a conflict of interest so I would expect that you would recuse yourself when we start interviewing the board of directors. John Patenaude I can recuse myself. If they want to talk to me that is fine. But I will not be making recommendations relative to any board members. Alderman Craffey Thank you. Alderman Flynn My understanding is that we won’t have any control over the board of directors either. Once we appoint them, we won’t have any control of that until their term expires and they have to be re-approved. Chairman Clemons Actually there are some provisions in our articles, and I don’t know what they are and I don’t have them in front of me, but the shareholders do have some limited control over the board members and the CEO I believe relative to certain things, certain situations. I don’t know what they are, but perhaps we should take out those articles again and take a look at that because I do believe that there are some provisions where we do hold a little bit of control. Alderman Flynn I think basically what I said was true, but you could be right there could be some extenuating circumstances. What I did want to say is something pertinent. I don’t even know why I added that except I think basically that is how it is going to work. There may be some little twists to it, but that is basically how it is going to work. What I did want to say is when the Mayor brought you forward to take over this position as transaction executive I voted for that, but I really didn’t know what to expect. I think the Mayor did a great job of selecting you. I think you have shown yourself to be extremely competent through this whole thing. This isn’t an easy group to work with; 15 different people, some male, some female, some older, some younger, all with different backgrounds, some come from New Hampshire, some come from Illinois, it is quite a diverse group, and I think you have done a great job of showing patience and quite honestly you have been very sincere in your dialogue with us. I have always felt that you have been very open and spoke fully, which I think you called it earlier spinning things; I never felt that you were spinning anything for us. Personnel – 2/10/11 Page 25 As in the political room here, this is a political, we have been voted in and we are political entities in a way. I find myself trying to be careful that I say the right words to express what I truly want to say. It is not that I am trying to put a spin on it, I am just looking for the right choice of words and I think you have done that as well. I think you have been very very good to this board, showed a lot of patience, and always showed a lot of honesty. I think your performance has been excellent, and I am sure you are going to be very very successful in this new position. I am sure we are going to get the acquisition through the PUC and I think you would be very very successful as an interim CEO. I think the Mayor did a good choice bringing you in in the first place and I think this is another good recommendation from the Mayor. Good luck to you. Thank you. John Patenaude Thank you. Alderman Cox I would like to echo the previous speaker’s remarks. You mentioned a very important component of this earlier; has Mrs. Patenaude bought into this? John Patenaude Yes she has. Alderman Cox That is extremely important. As a person that is coming up on his 25th wedding anniversary, I have learned the value of that ten fold. Another thing is for the ratepayers, the employees, and the company as a whole, a for- profit company has a culture to it, that culture is going to change to a not-for-profit. Have you thought about or do you have a plan in your mind, as you have been doing the due-diligence and thinking through all of this, how to deliver that message to the ratepayers because I know there has been some misprints in the paper, there has been some misinformation put out there, and there is a little bit of fear in how we are paying so much for this company so it is going to cost them that much more, which isn’t true, but how are you going to deliver that both in-house and to the ratepayers? John Patenaude To the ratepayers we have been trying to make that presentation as we go to each municipality, but I think again it means that we have to spend more time with each municipality if they have us. They could say we are not interested, but I think we have to make the effort to have discussions with the municipalities relative to rates and the rateholders in those municipalities. I think the employees get it. I think there is an understanding to the employees. Most of them, the folks in the field, their mentality has got to be if it is broken fix it kind of thing and customer service. I think we have heard some stories about people calling into customer service especially during the eminent domain and this process so it will be making sure that customer service has the right message to the ratepayers and that it is clear to the ratepayers what we are dealing with and where we are going because you have different ratepayers in different jurisdictions so it is making sure that the message is clear to them, and also to the organizations that we service relative to the water service company. There are different constituents there. Even with meetings for instance with the Towns of Hudson and Salisbury, we made sure that they understood that we were there to service them and to provide the services that they were happy with from Pennichuck and that they wouldn’t be disrupted. That is what we have to do; we have to make sure that the customers get the Personnel – 2/10/11 Page 26 message. It is not going to be a message that you know your rates are never going to go up, that is not the message, it has got to be we want to provide you good service which will keep costs down as long as possible, but inflation has got to hit us at some point in time and we will have to increase the rates. Alderman Cox Thank you. Alderman Chasse Just a few comments; you people really don’t have much expertise in human resource, but some of the questions tonight were very, very good ones and I commend you for it. Some of them were speculation on the day that he takes over. I know tonight we are voting on the confirmation, but that only becomes active on the day that we sign on the dotted line, that is correct? And it is the same thing for the board of directors. So the board of directors will be coming in front of this group also? Mayor Lozeau Yes. Alderman Chasse Everything is going to hit on the same day if we have a full compliment of board of directors. Alderman Clemons you mentioned something about well we wish could have probably had some other people to interview, maybe on a permanent basis maybe there is somebody out there. I don’t think we have enough expertise in this group to even hammer something like that out because when you hire somebody you kind of want to have somebody with a little bit of expertise because there are bonus plans that are involved, there are severance plans that are involved, vacation time, there is a long list of things that need to be done. I know we had the breakdown of your salary Mr. Patenaude and you are getting $190,000 and for a company like that we are getting away pretty cheap. I will be honest with you; I did a little bit more homework at work. I work in the human resource department and for that company it is somewhere in the $300,000 to $400,000. The only thing I have a problem with, well it is really not a problem, there is no severance package mentioned to you so if we confirm his appointment and there is a tiff that goes on between Mr. Patenaude and the City in the interim and he goes to the labor board, a severance package is given out only with a protection clause to it saying that if you acceptance this severance package, you cannot take the City of Nashua to court, and we don’t have one for you. Heaven forbid that we don’t have a tiff coming down the road, but like I say it protects us…go ahead Mr. Patenaude I will let you speak. John Patenaude Again, I have never had an expectation on an interim basis to have a severance package. I’m here to do this, I try to be reasonable. I did okay on Nashua Corp. so I am not looking to be greedy here. A severance package isn’t something I would be looking for, and I don’t think it is necessary. Again, if something were to happen, we can split our ways and go on our merry way, and I wouldn’t be adverse to that. Alderman Chasse I take your word for it as a gentleman, but you know I am looking out for the City of Nashua here and these are human resource things that they don’t hire anybody without, if a severance goes in it is always with that stipulation you can’t take the company to court. They still do, believe it or not they do. Outside of that, some of these questions like I say I commend you guys for some really tough, hard questions, Personnel – 2/10/11 Page 27 and some of them were speculation; he hasn’t been on the job yet so there are things that like I say he is going to fly by the seat of his pants; he is going to take over the company and he is going to find out oh I got to that bridge and now I have to cross it, I have to do something. If you are appointed, I wish you luck. John Patenaude Thank you. Alderman Tabacsko First of all I agree with the previous speaker that the questions tonight have been very good, and also I want to thank Mr. Patenaude for coming in and providing what I think have been very good answers. I’m not a member of the committee so I am not going to get to vote on this tonight, but I did just want to for the record let the committee know that I intend to support this. I am hoping that it will come back to the full board looking for approval at the next meeting because I intend to support it there. I firmly believe that Mr. Patenaude is uniquely qualified to take this position as an interim position and the fact that he is willing to do that working from the transaction side of it to the transition and interim piece I think there is a logic there that is perfect in my opinion. I just can’t imagine anybody else being more qualified to get us through this period of time that is going to be a challenge. It is going to be difficult, there are going to be a lot of unknowns that come up, and I think that what we have seen so far has certainly demonstrated to me that he is the appropriate person, and I think that we are lucky to have him doing that. I also agree with another previous speaker that I think we are getting away economically with this because I think it could be a lot more expensive. I think that is worth noting as well. I just wanted to make those comments. Thank you. Chairman Clemons Mr. Patenaude is there anything you would like to add this evening or closing remarks, anything like that? John Patenaude No, I’m fine. Again, it has been a good challenge and will continue down the path to try to close the transaction as soon as possible. Everything that we are doing, PUC has a scheduled meeting for the 24th so that is a good process. We will keep the full board informed as we are moving ahead. Alderman Chasse We beat up on him enough. Chairman Clemons I would just like to say briefly that I appreciate you coming to the committee tonight and giving us your honest and candid answers to our many questions. Certainly this is an important position for the future of our City and the company. I certainly am going to support your appointment. John Patenaude Thank you. Personnel – 2/10/11 Page 28 Chairman Clemons Thank you very much for coming, and we will move on in the agenda. Mayor Lozeau Thank you Mr. Chairman. Chairman Clemons Thank you very much Mayor. COMMUNICATIONS – None PERIOD FOR PUBLIC COMMENT – None APPLICATION TO LICENSE HAWKER'S, PEDDLER'S, ITINERANT VENDOR'S LICENSE - None APPOINTMENTS BY THE MAYOR Board of Registrars Carol Ann Cordero (Reappointment) Term to Expire: December 31, 2013 144 Amherst Street Nashua, NH 03064 Historic District Commission Robert G. Sampson (Reappointment) Term to Expire: September 30, 2013 18 Sargent Avenue Nashua, NH 03064 LouAnn Fornataro (New Appointment) Term to Expire: January 31, 2014 201 Main Street Nashua, NH 03060 MOTION BY ALDERMAN CHASSE TO RECOMMEND THE CONFIRMATION OF THE FOLLOWING APPOINTMENTS BY THE MAYOR: TO THE BOARD OF REGISTRARS THE RE-APPOINTMENT OF CAROL ANN CORDERO FOR A TERM TO EXPIRE DECEMBER 31, 2013, TO THE HISTORIC DISTRICT COMMISSION, ROBERT G. SAMPSON FOR A TERM TO EXPIRE SEPTEMBER 30, 2013, AND LOUANN FORNATARO FOR A TERM TO EXPIRE JANUARY 31, 2014 MOTION CARRIED Pennichuck Corporation Interim Chief Executive Officer (CEO) John L. Patenaude (New Appointment) One Timber Lane Hudson, NH 03051 Personnel – 2/10/11 Page 29 MOTION BY ALDERMAN CHASSE TO RECOMMEND THE CONFIRMATION OF THE APPOINTMENT OF JOHN L. PATENAUDE TO THE PENNICHUCK CORPORATION AS THE INTERIM CHIEF EXECUTIVE OFFICER UPON THE ACQUISITION OF PENNICHUCK CORPORATION A Viva Voce Roll Call was requested, which resulted as follows: Yea: Alderman Clemons, Alderman Vitale, Alderman Chasse, Alderman Flynn 4 Nay: Alderman Craffey 1 MOTION CARRIED UNFINISHED BUSINESS - None NEW BUSINESS – RESOLUTIONS – None NEW BUSINESS – ORDINANCES O-11-49 Endorser: Alderman-at-Large Ben Clemons Alderman Michael J. Tabacsko Alderman Jeffrey T. Cox ELIMINATING THE HOLDOVER LIMITATION ON TERMS OF LAND USE BOARD MEMBERS MOTION BY ALDERMAN CLEMONS TO RECOMMEND FINAL PASSAGE ON THE QUESTION Chairman Clemons This is basically getting us back into adherence with state law. We got a memo I believe it was either December of January from Attorney McNamee saying that our ordinances were out of adherence with state law in regards to this because some time in I believe it was 2009, the state changed the holdover terms to say that if you are in a position and no one came up to fill your re-appointment then you would stay in that position until a new re-appointment came. This just gets us back into compliance with that state law. Alderman Flynn I prefer not to cast my vote until after the public hearing. Is there a public hearing to be held on March 1st? Chairman Clemons There is a public hearing. What I actually would, and this is my opinion obviously, but what I would like to do is have us move forward with this and at the public hearing that night the committee is going to meet that night right Alderman Tabacsko? Alderman Tabacsko That is correct. Personnel – 2/10/11 Page 30 Chairman Clemons That way that committee can move it forward to the full board. That was my thinking on that. To that point, we do have a public comment period here this evening. It was on the agenda, and no one came. I understand the need for public input, but at the same time, the public will have that opportunity to do that, but I think we can move forward with it here tonight. Alderman Flynn I would ask you to accept a motion to table. MOTION BY ALDERMAN FLYNN TO TABLE MOTION CARRIED Division Taken 3/2 Alderman Chasse Due to the fact that Alderman Pressly is not here tonight, I would like to make a motion to table O-11-50, O-11-51 and O-11-54. MOTION BY ALDERMAN CHASSE TO TABLE ORDINANCES O-11-50, 0-11-51, AND 0-11-54 MOTION CARRIED O-11-50 Endorser:Alderman-at-Large Barbara Pressly Alderman Diane Sheehan Alderman-at-Large Mark S. Cookson Alderman Arthur T. Craffey, Jr. Alderman-at-Large Ben Clemons Alderman Mary Ann Melizzi-Golja Alderman-at-Large David W. Deane Alderman Kathy Vitale PROVIDING FOR COMMENT PERIODS AT COMMITTEE MEETINGS O-11-51 Endorser: Alderman-at-Large Barbara Pressly Alderman-at-Large Mark S. Cookson Alderman Arthur T. Craffey, Jr. Alderman-at-Large David W. Deane RELATIVE TO THE BUDGET REVIEW COMMITTEE INVITING THE SUPERINTENDENT OF SCHOOLS TO MEET QUARTERLY O-11-54 Endorser:Alderman-at-Large Barbara Pressly Alderman-at-Large Ben Clemons Alderman Diane Sheehan Alderman Arthur T. Craffey, Jr. Alderman-at-Large Mark S. Cookson REGARDING APPOINTMENT AND REAPPOINTMENT PROCEDURES Personnel – 2/10/11 Page 31 Chairman Clemons We have a few items that are tabled in committee. I don’t know if we want to take any of them up. I don’t believe we would. TABLED IN COMMITTEE Resolutions R-10-60 Endorsers: Mayor Donnalee Lozeau Alderman-at-Large David W. Deane Alderman-at-Large Mark S. Cookson Alderman Richard P. Flynn Alderman Mary Ann Melizzi-Golja Alderman Kathy Vitale PROVIDING FOR A REVIEW AND UPDATE OF THE MERIT PLAN Ordinances O-10-19 Endorser: Alderman-at-Large Barbara Pressly RELATIVE TO RESUMES OF DIVISION DIRECTORS AND DEPARTMENT HEADS ON THE CITY OF NASHUA’S WEBSITE O-10-23 Endorser: Alderman-at-Large Barbara Pressly ESTABLISHING AN OMBUDSMAN FOR THE CITY OF NASHUA AND AUTHORIZING THE TRANSFER OF $60,000 FROM ACCOUNT 591-86005 “FY2011 GENERAL CONTINGENCY” INTO ACCOUNT 501-53 “MAYOR’S OFFICE – PROFESSIONAL SERVICES” O-10-29 Endorser: Alderman Diane Sheehan PERMITTING AMPLIFIED SOUND IN GREELEY PARK WITH A DECIBEL LEVEL LIMITATION O-10-42 Endorser: Mayor Donnalee Lozeau ADOPTION OF AMENDMENTS TO MERIT EMPLOYEE RULES AND REGULATIONS EFFECTIVE JANUARY 1, 2011 RE-APPOINTMENT PROCESS DISCUSSION Chairman Clemons I wanted to put on the agenda a discussion topic, and we can decide if we want to discuss it tonight or not, but on the re-appointment process. One of the ordinances, which we just tabled kind of deals with that. I believe that it got a favorable recommendation by the Planning Board as it does relate to them. You have all seen my memo I am sure and you have seen Alderman Pressly’s response, and I don’t want to speak for her at all, but what I did want to say was that I think the discussion is important enough to have where we come up with some kind of process, and I think the template might actually be Alderman Pressly’s legislation. Personnel – 2/10/11 Page 32 I guess what I am asking the committee is do we want to take up the discussion when we discuss that ordinance? Alderman Chasse Yes. Alderman Craffey Yes. Chairman Clemons Okay. DISCUSSION Alderman Flynn I just wanted to say that this ordinance, I didn’t want to say it while we were under a motion to table, but I may very well support this, I just felt more comfortable, usually I wait to support what the Chairman suggests quite frankly. I think I am pretty consistent with that in most committees. Procedurally I like to support the Chairman, but I am very uncomfortable because of the public hearing. Thank you for that. Chairman Clemons Understood. Thank you. Alderman Tabacsko Just to that; the public hearing though, just from a timing standpoint, this got delayed. This is one of those, the never-ending snow storms has pushed this a couple of times. We will have the public hearing on the 1st. I was happy to see the Planning Board had issued a favorable recommendation. As I see it, it does seem more proforma cleaning up some paperwork than a particularly contentious issue so I’m hoping that we can get it from PEDC that night back to the full board and maybe take it, at the full board, and if your committee hasn’t met again, be able to get it finalized without further delay. Chairman Clemons Okay. Alderman Chasse I would not have a problem if we went to the full board and if you pulled it from committee because this is something that is just doing a good thing, and there is really no discussion. We already discussed the whole thing. I would have no problem. Pull it from the committee and bring it right up to the full board because I don’t see a problem with it at all. Chairman Clemons Are there any other thoughts on that? Alderman Craffey Personnel – 2/10/11 Page 33 I happen to agree with the previous speakers. I will support this if you were to pull it from committee at the full board. Chairman Clemons Okay. It sounds like that is a good idea. Okay. One thing I just want to comment on briefly is we have a lot of legislation that is tabled where the prime sponsor is Alderman Pressly, and just for the public and to get that out there and to the committee members, it is really a matter of timing. It is sort of a standard tradition in this committee that if the sponsor of the bill is not here that we table it. It just so happens that we have tabled a lot of Alderman Pressly’s legislation because of conflicting time things, but I did not want anybody to get the impression that we were being unfair or anything like that. There is always an open invitation to any Alderman to come to this committee and talk about anything. Alderman Chasse Are we going to have a special meeting of the Personnel/Administrative Affairs Committee just for Alderman Pressly? Chairman Clemons Looks like we might have to. Actually, speaking of special committee meetings, we actually might have one soon. I have to talk to Alderman Deane regarding the merit plan so we can have another joint meeting with the Budget Committee. Alderman Chasse I was just kidding you know. ADJOURNMENT MOTION BY ALDERMAN CHASSE TO ADJOURN MOTION CARRIED The meeting was declared closed at 8:52 p.m. Alderman Arthur T. Craffey, Jr. Committee Clerk