Jacksonville City Councilman Rory Diamond called for the council to formally investigate JEA’s derailed employee bonus plan, which he described as “legal theft,” during a fact-finding hearing Monday that saw JEA officials continue defending to it as a well-meaning attempt to motivate employees.
Council members accused JEA’s chief executive officer Aaron Zahn, who could be fired on Tuesday by his board of directors, of creating a limitless bonus plan designed to enrich executives and of misleading board members prior to them approving the plan last July.
Despite being asked numerous times, Zahn and several other JEA officials who testified during the hearing wouldn’t say who proposed the plan.
JEA’s board of directors, who are all appointed by Mayor Lenny Curry, approved the plan during the same July meeting that they allowed JEA executives to begin negotiating a potential sale of the city-owned utility.
City auditors and the city’s Office of General Counsel began examining the plan after it was approved. Auditors identified a number of concerns, including the possibility that it could result in a payoff worth hundreds of millions of dollars if JEA was sold for $4 billion. City attorneys concluded it wasn’t legal and advised JEA to abandon the plan.
JEA’s board plans to formally kill the plan at its meeting Tuesday.
Councilman Ron Salem, who co-hosted the meeting with Diamond, said he was convinced the plan would have almost exclusively benefited JEA’s highest-paid executives. He said board members have told him they were under the false impression the plan was fully vetted by city attorneys based on statements from JEA’s attorney Lynne Rhode at the meeting.
Salem also said board members were never briefed on the plan by Zahn or anyone else at JEA, and that information JEA officials provided led them to believe the plan’s cost would be capped at merely $3.4 million.
“I believe there is some blame on the board for not stopping this on July 23, but the overwhelming blame is on the executives at JEA for not briefing them,” Salem said. “If board members aren’t willing to get that engaged, they need not serve so we can prevent something like this that has haunted the community for the last three months from happening again.
JEA board member Kelly Flanagan also spoke at the hearing and told council members her main rationale for approving the plan was Rhode’s statement to the board that it been signed off on by the city’s Office of General counsel.
In addition to calling for Zahn and JEA’s chief financial officer Ryan Wannemacher to resign, Diamond called for Council President Scott Wilson to form an investigative committee, a rarely used power the council can use to compel witnesses to testify under oath, to continue examining the plan.
After the meeting, Wilson said he was open to the idea but wants to better understand what additional information could be gained by doing that.
On Sunday, JEA board member Henry Brown told Zahn he will try to fire him during Tuesday’s board meeting without cause, which would allow Zahn to depart JEA in the middle of a fever-pitch controversy with a lucrative severance package that could be worth at least $751,000.
On Monday, Zahn said the bonus plan was part of his vision to make JEA’s pay more competitive in order to retain and motivate employees. He denied creating it to enrich himself and said he regretted the controversy it created.
“I own this. I am the CEO so I take full ownership of this,” Zahn said during a break.
JEA officials provided hundreds of documents to the committee last week that showed Zahn spearheaded an initiative in early 2019 to make JEA’s compensation more competitive with other private utilities.
Zahn said the intentions behind the bonus plan “were pure” but that he should have discontinued it as soon as JEA began negotiating a potential sale.
Diamond challenged Zahn on that characterization, noting that Zahn pushed for the board to approve the plan at the same meeting they allowed his team explore a sale. Instead, he accused Zahn of devising a scheme to enrich himself and of refusing to give city auditors clear answers when they began scrutinizing the plan.
“I believe you were going to buy the shares other people weren’t going to buy because they weren’t smart enough or didn’t have the money,” Diamond said. “It was legal, but it was still wrong.”
Salem challenged Zahn’s portrayal of the auditor’s concerns as “sensational” and chastised him for attempting to implement the plan despite knowing it could lead to lucrative payouts.
“As soon as the potential value was identified, someone should have said, “Let’s terminate this,” Salem said.