What would you do: Star performer won't follow rules

Periodically, we ask three HR managers how they’d handle a difficult situation at work. Today’s problem: A top performer doesn’t think the rules apply to him.
The scene
Supervisor Sam White pointed at his wristwatch and said, “Do you see what time it is?”
HR manager Janice Rossi replied, “I’ve got exactly 9:43.”
“Then that makes Jerry Casale exactly 43 minutes late for my meeting with him,” Sam said while shaking his head. “He’s nowhere to be found and he hasn’t called.”
Janice recalled the number of times she and Sam had spoken to Jerry about his problems with arriving late, leaving early and taking long lunches. Apparently, the talks hadn’t changed anything.
‘Jerry’s Rules’
“Let me ask something, Sam,” Janice said. “Is Jerry still one of your top performers?”
“Not one of the top,” Sam answered. “More like the top.”
“So we still have the problem of high performance but lousy attendance?” Janice followed up.
“That’s right,” Sam said. “Jerry absolutely refuses to respond to anything we’ve done to try to change his behavior.”
“But his performance is still top notch, right?” Janice concluded. “So, can you put up with his downsides?”
“Probably,” Sam nodded, “but I’m getting a lot of grief from other people who complain to me about ‘Jerry’s Rules’ and the rules for everyone else.”
“Sam, you have the green light to do whatever’s necessary,” Janice noted.
“That’s the problem,” Sam said. “I don’t know what to do.”
If you were Janice, how would you respond?
Denise Nasulli, HR manager, Hamden, CT
What Denise would do: I say you go by the book on this one and use whatever discipline you’d use with any other employee. Usually, that means going through some sort of progressive discipline and counseling, but if none of that works, you have to consider terminating the employee.
Reason: If you’re going to have rules and keep them, then you have to insist that everyone follows them, no matter what the performance level is. To do otherwise is just asking for a lot of trouble when dealing with employees in general.
Thomas Petersen, HR manager, Anchorage, AK
What Thomas would do: If it’s possible, I’d make punctuality a performance issue. In other words, it would be one of the performance measures we’d use for Jerry. If he couldn’t meet the standards we set up, it would affect his raises and eligibility for promotion. If he can live with those penalties for his behavior, then so be it.
Reason: The majority of employees have something about them that could stand improvement, and often those shortcomings can be addressed by using performance criteria. I’m not saying you’re always able to change people, but it does let them know you have a system of rewards and penalties.
Patrick Willings, executive director, Greensboro, NC
What Patrick would do: You have to go through all the normal counseling and disciplinary procedures, but in my experience there’s a low success rate at changing people like this. That means his manager has to make a decision early on: Is he worth the trouble? Or should he be subject to termination? Then you back that decision.
Reason: It all comes down to a judgment call of weighing the positives against the negatives, and living with your decision.