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Home My WebLink AboutStaff Report 2411-3794CITY OF PALO ALTO CITY COUNCIL Special Meeting Monday, December 09, 2024 Council Chambers & Hybrid 5:30 PM Agenda Item 17.Approval of Amendments to the Employment Agreements between the City of Palo Alto and Council Appointed Officers, specifically the City Manager, City Attorney, and City Clerk. CEQA Status - Not a Project 5 9 4 5 City Council Staff Report From: Council Appointed Officers Committee Report Type: ACTION ITEMS Lead Department: Human Resources Meeting Date: December 9, 2024 Report #:2411-3794 TITLE Approval of Amendments to the Employment Agreements between the City of Palo Alto and Council Appointed Officers, specifically the City Manager, City Attorney, and City Clerk. CEQA Status - Not a Project RECOMMENDATION Staff recommends that the City Council approve and authorize the Mayor to execute the following contract amendments for Council Appointed Officers: 1. Amendment No. 12 to Employment Agreement between the City of Palo Alto and Molly S. Stump (Attachment A); 2. Amendment No. 6 to Employment Agreement between the City of Palo Alto and Ed Shikada (Attachment B); and 3. Amendment No. 1 to Employment Agreement between the City of Palo Alto and Mahealani Ah Yun (Attachment C). BACKGROUND/DISCUSSION The City Council has completed annual merit reviews for Council Appointed Officers (CAOs): City Attorney Molly S. Stump, City Manager Ed Shikada, City Clerk Mahealani Ah Yun for the prior fiscal year’s performance (FY 2024). Staff has been directed by City Council to bring forward amendments to employment agreements to implement merit- based increases to the CAO’s annual salaries, effective July 1, 2024, as follows: •City Attorney Molly S. Stump, merit increase of 6% of which 1% will be added to annual compensation and 5% towards a 401(a) defined contribution retirement plan. Stump’s new annual salary will be $365,266 and new annual contribution to 401(a) $33,082. (Attachment A) 5 9 4 5 •City Manager Ed Shikada, merit increase of 6% of which 3% will be added to annual compensation and 3% towards a 401(a) defined contribution retirement plan. Shikada’s new annual salary will be $422,803 and new annual contribution to 401(a) $30,815. (Attachment B) •City Clerk Mahealani Ah Yun, merit and market-based adjustment to median of the market at $192,500 (Attachment C). As appointed officers of the Council, the City Attorney, City Manager, and City Clerk are employed under employment agreements specifying that performance and salary are evaluated annually. CAO’s do not receive regular cost of living adjustments which are applied to other employee groups (Mgmt, SEIU, IAFF, PAPOA, etc..), all compensation is outlined by Council and approved during annual evaluations. The following paragraph is the specific provision in the City Manager’s employment agreement that addresses salary adjustments; the City Attorney and City Clerk’s employment agreements contain similar provisions. Salary Adjustments. Not less than once each year, the City Council shall meet for the express purpose of evaluating the performance of Shikada and determining whether to grant him an increase in annual base salary based on performance. The City Council will act in good faith in determining whether to provide an increase based on performance, but the ultimate decision in this regard is within the sole discretion of the City Council. The Council may also adjust Shikada’s annual base salary due to labor market and/or internal equity conditions. For the FY 2024 performance evaluation period, City Council completed evaluations for the City Attorney, City Manager, and City Clerk. Council completed the evaluations with the assistance of an outside consultant. The consultant, a professional with the firm MRG, facilitates CAO evaluations with many agencies throughout California. The process includes surveys, 1-1 interviews, and facilitated closed session discussions as appropriate under the Brown Act. At the conclusion of the CAO evaluation process, Council directed staff to prepare amendments reflecting the increases outlined above, amendments are attached to this staff report as exhibits. FISCAL/RESOURCE IMPACT The additional cost for CAO salary increases of approximately $73,800 for the CAO positions is expected to be funded in the respective departmental FY 2025 Adopted Budgets. These adjustments are slightly higher than unrepresented management professional citywide average wage increase assumptions; however, staff anticipates the respective departments to absorb these costs. Staff will monitor these departments in FY 2025 and bring forward budget adjustments if necessary, and these changes will be incorporated as ongoing changes in the development of the FY 2026 annual budget. 5 9 4 5 STAKEHOLDER ENGAGEMENT Employment agreements of local public agency executives are required to be voted on in open session when changes in salary or benefits are proposed to provide transparency for stakeholders. ENVIRONMENTAL REVIEW Council action on this item is not a project as defined by the California Environmental Quality Act (CEQA) in that the amendments to the employment agreements are personnel-related actions. CEQA Guidelines Section 15378(b)(2). ATTACHMENTS Attachment A: Amendment No. 12 to the Employment Agreement between the City of Palo Alto and Molly Stump Attachment B: Amendment No. 6 to the Employment Agreement between the City of Palo Alto and Edward Shikada Attachment C: Amendment No. 1 to the Employment Agreement between the City of Palo Alto and Mahealani Ah Yun APPROVED BY: Sandra Blanch, Human Resources Director 1 AMENDMENT NO. TWELVE TO EMPLOYMENT AGREEMENT BETWEEN THE CITY OF PALO ALTO AND MOLLY S. STUMP This AMENDMENT NO. TWELVE to the EMPLOYMENT AGREEMENT(“Agreement”) is entered into on December 2, 2024 by and between the CITY OF PALO ALTO, a California chartered municipal corporation (“City”), and MOLLY S. STUMP (“Stump”), an individual, located at 250 Hamilton Avenue 8th Floor, Palo Alto, CA. R E C I T A L S: WHEREAS, the original EMPLOYMENT AGREEMENT between the City of Palo Alto and Molly S. Stump, attached hereto and incorporated herein as Exhibit “A” was entered into between the parties for the services of City Attorney on or about April 18, 2011; and WHEREAS, AMENDMENT NO. ONE to the Agreement, attached hereto and incorporated herein as Exhibit “B” was entered into between the parties on or about March 24, 2014; and WHEREAS, AMENDMENT NO. TWO to the Agreement, attached hereto and incorporated herein as Exhibit “C” was entered into between the parties on or about December 8, 2014; and WHEREAS, AMENDMENT NO. THREE to the Agreement, attached hereto and incorporated herein as Exhibit “D” was entered into between the parties on or about February 1, 2016; and WHEREAS, AMENDMENT NO. FOUR to the Agreement, attached hereto and incorporated herein as Exhibit “E” was entered into between the parties on or about December 12, 2016; and WHEREAS, AMENDMENT NO. FIVE to the Agreement, attached hereto and incorporated herein as Exhibit “F” was entered into between the parties on or about November 6, 2017; and WHEREAS, AMENDMENT NO. SIX to the Agreement, attached hereto and incorporated herein as Exhibit “G” was entered into between the parties on or about December 17, 2018; and WHEREAS, AMENDMENT NO. SEVEN to the Agreement, attached hereto and incorporated herein as Exhibit “H” was entered into between the parties on or about December 17, 2019; and WHEREAS, AMENDMENT NO. EIGHT to the Agreement, attached hereto and incorporated herein as Exhibit “I” was entered into between the parties on or about June 2 22, 2020; and WHEREAS, AMENDMENT NO. NINE to the Agreement, attached hereto and incorporated herein as Exhibit “J” was entered into between the parties on or about December 13, 2021; and WHEREAS, AMENDMENT NO. TEN to the Agreement, attached hereto and incorporated herein as Exhibit “K” was entered into between the parties on or about November 28, 2022; and WHEREAS, AMENDMENT NO. ELEVEN to the Agreement, attached hereto and incorporated herein as Exhibit “L” was entered into between the parties on or about December 11, 2023; and WHEREAS, the parties wish to amend the Agreement; NOW, THEREFORE, in consideration of the covenants, terms, conditions, and provisions of this Amendment, the parties agree: SECTION 1. Section 3.1 of the Agreement, Compensation, is hereby amended to read as follows: At the recommendation of the Palo Alto City Council Appointed Officers Committee (CAO) and consistent with annual merit practices, effective the first full pay period following July 1, 2024, Stump will receive a base annual salary of Three Hundred Sixty-Five Thousand Two Hundred and Sixty-Six dollars ($365,266), paid on City’s normal paydays. Stump shall be an exempt employee under applicable wage and hour law and her base salary shall be compensation for all hours worked. City agrees that the amount of Stump's base annual salary shall not decrease, except as part of a permanent decrease that is consistent with the Fair Labor Standards Act and that is applicable to either all Council Appointed Officers or all City Executive Staff (which includes all Council Appointed Officers). Section 5.2 of the Agreement, 401(a) Defined Contribution Retirement Plan, is hereby amended to read as follows: The City shall contribute Thirty-Three Thousand and Eighty-Two dollars ($33,082) annually, prorated and contributed on the City’s normal paydays, to a 401(a)- retirement plan account established for Stump. SECTION 2. Except as herein modified, all other provisions of the Contract, including any exhibits and subsequent amendments thereto, shall remain in full force and effect. IN WITNESS WHEREOF, the parties have by their duly authorized 3 representatives executed this Amendment on the date first above written. Attest: City of Palo Alto Approved as to form: Molly S. Stump Attachments: EMPLOYMENT AGREEMENT BETWEEN THE CITY OF PALO ALTO AND MOLLY S. STUMP AMENDMENTS NO. ONE THROUGH NO. ELEVEN. 1 AMENDMENT NO. SIX TO EMPLOYMENT AGREEMENT BETWEEN THE CITY OF PALO ALTO AND EDWARD SHIKADA This AMENDMENT NO. Six to the EMPLOYMENT AGREEMENT (“Agreement”) is entered into on, December 2, 2024 by and between the CITY OF PALO ALTO, a California chartered municipal corporation (“City”), and Edward Shikada (“Shikada”), an individual, located at 250 Hamilton Avenue 7th Floor, Palo Alto, CA. R E C I T A L S: WHEREAS, the original EMPLOYMENT AGREEMENT between the City and Shikada, attached hereto and incorporated herein as Exhibit “A” was entered between the parties for the services of City Manager on or about September 18, 2018; and WHEREAS, AMENDMENT NO. ONE to the Agreement, attached hereto and incorporated herein as Exhibit “B” was entered between the parties on or about December 16, 2019; and WHEREAS, AMENDMENT NO. TWO to the Agreement, attached hereto and incorporated herein as Exhibit “C” was entered between the parties on or about June 22, 2020; and WHEREAS, AMENDMENT NO. THREE to the Agreement, attached hereto and incorporated herein as Exhibit “D” was entered between the parties on or about December 13, 2021; and WHEREAS, AMENDMENT NO. Four to the Agreement, attached hereto and incorporated herein as Exhibit “E” was entered between the parties on or about November 28, 2022; and WHEREAS, AMENDMENT NO. Five to the Agreement, attached hereto and incorporated herein as Exhibit “F” was entered between the parties on or about December 11, 2023; and WHEREAS, the parties wish to amend the Agreement; NOW, THEREFORE, in consideration of the covenants, terms, conditions, and provisions of this Amendment, the parties agree: SECTION 1. 2 Section 4.1 of the Agreement, Initial Compensation, is hereby amended to read as follows: 4.1. Compensation. At the recommendation of the Palo Alto City Council Appointed Officers Committee (CAO) and consistent with annual merit practices, effective the first full pay period following July 1, 2024, Shikada will receive a base annual salary of Four Hundred Twenty-Two Thousand Eight Hundred and Three dollars ($422,803). This amount is subject to authorized or required deductions and withholding, prorated, and paid on City’s regular paydays. Shikada is an exempt employee under applicable wage and hour law and his base salary shall be compensation for all hours worked. The City agrees that the amount of Shikada’s base annual salary will not decrease, except as part of the permanent decrease that is consistent with the Fair Labor Standards Act. Section 6.1 of the agreement, 401(a) Defined Contribution Retirement Plan, is hereby amended to read as follows: 6.1 401(a) Defined Contribution Retirement Plan. City will contribute Thirty Thousand Eight Hundred and Fifteen dollars ($30,815) annually, prorated and contributed on the City’s normal paydays, to a 401(a) retirement plan account established for Shikada. SECTION 2. Except as herein modified, all other provisions of the Contract, including any exhibits and subsequent amendments thereto, shall remain in full force and effect. IN WITNESS WHEREOF, the parties have by their duly authorized representatives executed this Amendment on the date first above written. ATTEST: CITY OF PALO ALTO City Clerk Mayor APPROVED AS TO FORM: EDWARD SHIKADA City Attorney Attachments: 3 EXHIBIT A: EMPLOYMENT AGREEMENT BETWEEN THE CITY OF PALO ALTO AND EDWARD SHIKADA EXHIBIT B: AMENDMENTS NO. ONE THROUGH NO. FIVE TO SHIKADA 1 AMENDMENT NO. FIVE TO EMPLOYMENT AGREEMENT BETWEEN THE CITY OF PALO ALTO AND Mahealani Ah Yun This AMENDMENT NO. One to the EMPLOYMENT AGREEMENT (“Agreement”) is entered into on, December 2, 2024 by and between the CITY OF PALO ALTO, a California chartered municipal corporation (“City”), and Mahealani Ah Yun (“Ah Yun”), an individual, located at 250 Hamilton Avenue 7th Floor, Palo Alto, CA. R E C I T A L S: WHEREAS, the original EMPLOYMENT AGREEMENT between the City and Ah Yun, attached hereto and incorporated herein as Exhibit “A” was entered between the parties for the services of City Clerk on or about January 22, 2024; and NOW, THEREFORE, in consideration of the covenants, terms, conditions, and provisions of this Amendment, the parties agree: SECTION 1. Section 3 of the Agreement, Salary, is hereby amended to read as follows: At the recommendation of the Palo Alto City Council Appointed Officers Committee (CAO) and consistent with annual merit practices, effective the first full pay period following July 1, 2024, Ah Yun will receive a base annual salary of One Hundred Ninety two Thousand Five Hundred dollars ($192,500). This amount is subject to authorized or required deductions and withholding, prorated, and paid on the City's regular paydays. Ah Yun is an exempt employee under applicable wage and hour law and her base salary shall be compensation for all hours worked. The City agrees that the amount of Ah Yun's base annual salary will not decrease, except as part of a permanent decrease that is consistent with the Fair Labor Standards Act. SECTION 2. Except as herein modified, all other provisions of the Contract, including any exhibits and subsequent amendments thereto, shall remain in full force and effect. IN WITNESS WHEREOF, the parties have by their duly authorized representatives executed this Amendment on the date first above written. ATTEST: CITY OF PALO ALTO 2 Mayor APPROVED AS TO FORM: Mahealani Ah Yun City Attorney Attachments: EXHIBIT A: EMPLOYMENT AGREEMENT BETWEEN THE CITY OF PALO ALTO AND Mahealani Ah Yun