DANVERS — In negotiating a new five-year contract, Town Manager Wayne Marquis took a reduced pay increase and made other concessions, while selectmen agreed to take steps to bolster his pension.

The board announced the contract extension with Danvers' longest-serving town manager at the start of its meeting Tuesday night, selectmen Chairman Dan Bennett said yesterday. Marquis will make $187,700 under the new deal.

"It's a win-win for the town and the town manager," Bennett said. "We know what we have; we certainly did not feel we could do better."

The new contract provided some give-and-take that worked out for both the town and Marquis, Bennett said.

"I was pleased, and I expressed that publicly," said Marquis, who turned 59 last week. He said the town has made progress on projects it has begun over the past few years, including the long-awaited nearly $71 million renovation of Danvers High School, which is scheduled to open in September 2013.

"Our plates are full," Marquis said during an interview in Town Hall yesterday. He said the new agreement is fair to both sides.

"I am in full support of this; the man does a good job," Selectman Gardner Trask said.

Marquis' current five-year deal was set to expire June 30, 2013.

The new contract, which was hammered out over the past couple of months, starts July 1, and it incorporates what would have been the final year of the prior contract. Under the new agreement, Marquis' contract runs until June 30, 2017.

The new contract calls for salary increases of 2.5 percent a year based on performance.

"Nothing's automatic," Marquis said of those pay raises.

Under the new contract, his salary will be $187,703 in fiscal 2013, based on a 2 percent increase that takes effect July 1.

This increase represents a reduction from a 3 percent raise spelled out in the old contract. In 2011, Marquis earned $184,432, according to town records.

Marquis also agreed the town should no longer have to pick up the $1,200-a-year tab for a disability income insurance policy. Marquis said he made the concessions due to uncertain economic times and the commitment the town has made to him over the years. Marquis has served as town manager since February 1979.

Another change was how his salary should be counted toward his pension.

In prior contracts, his salary was made up of three components: a base salary, a $9,000-a-year car allowance and a contribution of 8 percent of his salary to a retirement plan. By rolling all three into the manager's base pay, these items can be counted as salary and wages toward his pension.

Marquis said these items were pension-eligible, but under recent state pension reforms, items such as car allowances are no longer counted. Marquis said was interested in making sure the compensation would be counted toward his pension in the future.

"We are just making sure he remains whole instead of having something removed," Trask said.

Marquis had been paying into his pension over the years as if the car and retirement allowances counted toward his pension, Bennett said.

"We didn't want to penalize him," Bennett said.

"I thought it was only fair to keep him whole," Selectman Keith Lucy said.

The contract also carries another change in that Marquis must give no less than 90 days' notice if he decides to voluntarily leave his position before the end of the contract. His present contract calls for 60 days' notice.

Marquis' prior contract called for a successor agreement to be in place by June 30, and in February he sent a letter to Bennett about entering into negotiations for a new contract before the end of the fiscal year. Bennett and Lucy served on the negotiating committee and met with Marquis three times. On Tuesday, selectmen met in executive session to discuss the contract proposal before announcing it in open session.

Staff writer Ethan Forman can be reached at 978-338-2673, by email at eforman@salemnews.com or on Twitter @DanverSalemNews.

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