Popejoy Agrees to Stay On Even After He’s Out : Recovery: Supervisors want his continued help on financial and litigation issues. They hope to have a replacement by August but haven’t decided how much power they should give the new CEO.

Even after he is replaced, Orange County’s interim chief executive officer, William J. Popejoy, will continue to guide much of the bankruptcy recovery effort, according to an informal agreement reached with supervisors during a closed-door meeting this week.

“He will stay on to assist and deal with the financial issues and the resolution of the litigation matters,” Supervisor Marian Bergeson confirmed Friday. “That was a strong condition that I thought was very important. We need to maintain continuity.”

Supervisors on Thursday had sought to publicly reassert their authority over Popejoy, who had become increasingly confrontational with his five bosses. After a two-hour, closed meeting to discuss Popejoy’s future, Board Chairman Gaddi H. Vasquez declared that the board still supported Popejoy but had “clarified” his role to make him more accountable to the supervisors.

He also said the board would step up its recruitment of a permanent CEO.

The meeting to evaluate Popejoy’s job performance came two days after voters rejected the Measure R tax hike proposal, which Popejoy made the centerpiece of his recovery plan.

The deal to have Popejoy continue working for the county even after a replacement is hired was not mentioned following the closed-door meeting. The board and Popejoy did not formalize the arrangement in writing, nor did they specify how long he will stay after the replacement is hired, Bergeson said.

According to sources familiar with the discussions, some supervisors apparently said they especially wanted to ensure that Popejoy continue handling any possible settlement negotiations with Merrill Lynch & Co., which the county has sued for $2.4 billion.

That lawsuit, which was filed shortly after the Dec. 6 bankruptcy declaration, contends that the Wall Street firm was responsible for much of the county’s $1.7 billion in investment losses. Merrill Lynch officials deny any wrongdoing.

Popejoy tried to open settlement talks with the firm in mid-May, flying to New York to meet with company Chairman Daniel Tully. Popejoy, who is a personal acquaintance of Tully’s and once went white-water rafting with him, told Tully that the county might settle the case for $1.2 billion. Tully rejected the figure.

It was Popejoy’s meeting with Tully, of which the board was unaware, that prompted some supervisors to complain that he wasn’t keeping them properly informed of the bankruptcy recovery plans.

But they now also say it is his contact with the firm that necessitates his continued involvement in the recovery effort.

“The understanding was that [Popejoy] will continue to provide his services, particularly with regard to litigation,” Bergeson said. “That was a major consideration. He’s anxious to help the county and see it through.”

Although the board continues to support Popejoy, Supervisors Roger R. Stanton and Jim Silva are not pleased with him. Over the course of his stint with the county, Popejoy has publicly accused Silva of lacking leadership abilities and has asked the county grand jury to investigate removing Stanton from the board for alleged misconduct. Recently, Silva called for Popejoy’s ouster.

Supervisors this week said they would step up the search for a new CEO. The board wants to name someone by July 29, sources said. Popejoy’s original contract with the county, in which he agreed in February to work for free, expires in November.

Some county observers said finding Popejoy’s replacement by the end of the month is too optimistic, especially because board members appears to be divided on how much power to give a new chief executive. Silva, for one, has endorsed the idea of creating a position with less power.

“I don’t think we have fully developed the role of the CEO,” said Bergeson, who acknowledged that the replacement date may be optimistic. “I think we should have whatever amount of time it takes to get the most qualified person as possible.”

Elloit Gordon, managing vice president with the Newport Beach search firm Korn/Ferry International, questioned whether the supervisors could find a qualified replacement before they establish the job requirements.

“In any position, if the responsibilities, authority and accountability are not clearly defined, it’s a hindrance,” he said. “Anyone with the caliber of qualifications to hold the position is going to want a clear understanding of the job before accepting it.”