By Mark Price And Eric Frazier
msprice@charlotteobserver.com

The United Way of Central Carolinas has settled its long-running legal battle with Gloria Pace King, giving its former president nearly $700,000 to end a controversy that crippled one of the region's most important charities.

King had claimed she was owed more than $2 million in back pay and retirement benefits.

United Way CEO Jane McIntyre said she was pleased with the settlement and eager to move on.

"We recognize that a number of people will still be concerned that any settlement was reached and money was paid," she said. "But I hope people will look at the full picture and consider all the facets....The settlement allows everyone to devote full focus on the needs of the community."

United Way fired King in 2008 amid public outcry over the size of her compensation package. The Observer and its news partner WCNC-TV raised questions about her pay after the agency's tax filings showed an $822,507 payment to King's employee benefits plan.

The payment, for a supplemental retirement account, brought her total compensation that year to $1.2 million. Outraged donors and citizens called it excessive, and many declared they would no longer support the United Way, which raises money to support about 100 local charities.

United Way officials tried to explain that they added the money to fund a $2.1 million supplemental retirement plan they had approved for King in 2006.

They said she'd been doing a good job, and they needed to increase her compensation to keep her from leaving. But donors weren't swayed, and kept voicing anger until board members finally called the plan a mistake, and declared King's continued leadership untenable.

King sued, alleging discrimination and wrongful termination. She said she'd done nothing wrong, and sought reinstatement of the supplemental pension, as well as back pay.

The settlement, announced by the United Way this afternoon, averts a court trial. The United Way agreed to pay King $233,000 of its own money, with another $466,000 from United Way's liability insurance carrier.

United Way officials said the $233,000 would come from money set by the board in case it needed to pay off the remainder of King's three year employment-contract.

United Way officials said the settlement does not cover her base pension, which was not at issue in the litigation. King keeps that money, earned for her 14 years of service. (Details on her base pension weren't divulged Wednesday, but United Way officials have previously said she was eligible for a base pension worth up to $645,000).

The agency's 90-plus member charities were informed of the settlement via an email from McIntyre at 3 p.m. Wednesday: "We are pleased to inform you that United Way's board of directors and our former chief executive officer have settled all outstanding litigation. This chapter is now concluded."

The case was expected to go to a jury in 2012, and some board members had said publicly that they were prepared to stay with the case until then. However, they voted unanimously to accept the settlement early Wednesday morning.

Agency officials said the vote was "a prudent business decision," because it avoided the cost of litigation and the potential public relations damage that might have harmed 2012 fund raising.

McIntyre believed a court case could have overshadowed that campaign, and put the already fragile agencies at greater financial risk. The controversy resulted in about a $13 million drop in the agency's campaign in 2008. Officials also blamed the poor economy for the decline.

The result: Budget cuts to most of the agency's member charities, including some that lost more than 50 percent.

Carlos Evans, the agency's former board chair, was among those named in the lawsuit, and he was cautious about commenting on the specifics.

"For me, this is sort of a last chapter and I'm so glad for everyone that it's resolved: United Way, the agencies, Gloria, and the community," said Evans. "I think it's important that the settlement does provide for significant money to come back to United Way agencies."

United Way officials said they expected all money not given in the settlement to come back to the agency, which it intends to use in the Community Care Fund. That fund is the source of money divided up among United Way's member charities each spring.

After King's firing, the agency instituted a series of reforms that elevated the importance of the Community Care Fund. Among the other changes: Reduction of agency's operating budget from $10.4 million to $6.2 million; reduction of workforce from 97 to 42; reduction of board from 67 members to 22 to make it more focused; and an a series of bylaw changes that call for closer scrutiny of decisions involving pay, benefits and expenses.

The board also voted to hire McIntyre as King's replacement, at about half the salary.

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