Dm? Memorandum . ?mivv . To: Personnel File of Tony Meoendez CC: Michael McDougald - Charlie Geer From: Mark A. McCollmn Date: Monday, 9/28/2006 Re: 2005 Performance Review and 2006 Expectations - Tony Monoxide: This morning I met with Tony Menendez, following his return from a six month leave of absence, to ?nalize the 2005 PPR process, which remained incomplete as a result his leave. Charlie Geer was also in attendance at the meeting, since Tony will at this point forward be one of Charlie?s direct reports. The outline of our discussion covered my comments on his 2005 pcrfonnance against his objectives and my expectations for his perfonnance improvement and focus during the remainder of 2006 as follows: We ?rst reviewed Tony?s 2005 performance objectives, what we agreed he would do to accomplish those objectives and the performance measures we agreed would use to gauge whether the ob}cciivcs had been achieved. It should be noted that Tony?s 2005 performance objectives were not subu?tted or agreed until January 2006, so there wasn?t, for the most part, a high degree of risk behiml their ultimate achievement because he had the bene?t of hindsight. Notedtiistanding, I felt that he had not met my expectations on several of the primary objectives we had agreeci upon: 1. Providing guidance and tools to the organization to help them understand andproactivefy deal with technical accounting issues - the performance measure for this objective was omer guidance on technical questions and suppon provided to resolve the issues. Based on my observations of Tony?s work patterns and constant communication with the broader organization, Tony was not providing timely technical guidance. Often, issues (sometimes even small ones) would take months to be resolved. For instance, some ofthe FIN 46 detenninations on very small joint ventures took several months to conclude. Further, Toriy?s guidance to the organization was not always definitive enough to help them detezmine a resolution. One example of this was during the RTA discussions, where the organization called me for help because Tony?s conclusions as to whether the new venture would be consolidated or not reversed several times even though the facts were only improving toward one answer. Even after I convened a meeting to provide Tony an opporomity to table the issues and believed we had reached a final conclusion, I understood (?I?ony did not come back to talk to me about it) that he again reversed his conclusion. 2. Developing positive working relationsth with both F??ui and business customers - in his role as the technical liaison between the accounting groups and with operations management, Tony?s success is highly dependent upon good working relationships and open lines of communication above and below him. It is imperative that Tony be seen as part of the team, because his primary job description involves supporting the rest of the organization in achieving its business objectives by providing timely technical accounting guidance. In this regard, I do not feel that HAL000740 September 28, 2006 Tony met my expectations. I had asked Tony to keep me, as his supervisor at that time, apprised of his activities on a very regular basis. I rarely saw Tony during 2006, despite on occasion sending emails to him asking him to stop by my of?ce and give me a report. However, I did hear a signi?cant amount of frustration expressed ?om the rest of the organization (both and Operations) that Tony was not being easy to work with, would not respond timely, and didn?t treat those whom he worked with as ?customers?. The complaints had nothing to do with his conclusions; instead, people were ?ostxatcd with how and when the conclusions were delivered and the lack of help from him with finding workable solutions to business problems. Also, on occasion we needed to (lo more detailed contract/field practice reviews to determine the correct accounting, and the rest of the staff perceived that Tony wasn?t a ?team player" because he chose not to help in those studies. 3. Providing infomationcl presentations on technical accounting issues to the PM organization Tony anti his team did a good job of hosting a number of technical sessions and in fact traveled to do some revenue recognition and FIN 46 training internationally. I only saw one technical session, the large?group, mid-year GAAP Technical Accounting Update helci for a larger group of employees (about 120 people), but I received anecdotal feedback from a combo: of the other sessions Tony?s group held. While the number of sessions was good, I believe the effectiveness of the sessions was questionable. In the session I attended, the presenters were uoprcpared, ?ippant about the seriousness of their topics and i believe, at worst, demeaning to the attendees in inferring that some of the topics being presented were too complicated for them I sis heard that, in 'ons I did not attend, the presenters confused the audiences by articu sting personal views as GAAP an or company . ?s responsibility that any training he - or his group conducts is well?orchestrated, and that the presenters presenter ?compel? the audience through their presentation of the materials to want to retain the information, and that they stay ?on message? with regard to GAAP and company poli?f-~ In light of?ce above shortfalls in meeting my expectations, I outlined for Tony my expectations, working through Charlie as his supervisor, for the remainder of 2006: 1. Tony must complete his 2006 objectives by Monday, October 16, 2006, to be approval by both Charlie and me. His objectives will contain each of the items that follow below. 2. Tony must provide a detailed written staff report on his activities to Charlie on a bi~wcekly basis beginning Friday, October 13, 2006 3. All technical questions that hit Tony?s desk (whether via the Accounting Research Group?s web? portal, email, phone call, or by direction from Charlie) must be loggetl in (origination date, ?customer?, the question asked, the ultimate answer provided, the date the answer is provided and the date the supporting documentation is ?nishedintegral part of Tony?s staff report. Tony?s perfommnce measures are to verbally clear all questions within two weeks of origination date and ?nish all written documentation of the issue within, 30 days of origination date. 4. Tony must make ensure that he meets at least weekly with Charlie to verbally report on his activities and progress toward mutual goals. 5. Tony will plan a largcugroup GAAP Technical Accounting Update to be held sometime in mid~ December. Presenters will be chosen and prepared in advance to make sure the session is crisp and highly effective. A formal class evaluation will be taken, and a positive evaluation of the overall class and the individual speakers will be the perfomiance measure for this objective. 6. Tony will begin work or: a Fundamentals i1? course for rollout in early 2067 to the ESG organization. Topic selection, identi?cation of subject matter experts, rough drafts of presentation materials and a rollout timeline (where and when) must be completed by December 31, 2006. 7. Finally, Tony will prepare a ?Relationship Development Plan" for each of 5 key ?customers? (to be mutually with Charlie). 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