Document obtained by City Council committee investigating JEA shows controversial performance unit plan was weighted toward gains for top executives.
A document obtained by the special City Council committee investigating JEA shows top utility executives could have gained the most from a controversial incentive plan that would have triggered multi-million dollar payments if JEA had been sold.
City Council member Rory Diamond called the document "shocking and disgusting" and said JEA failed to turn it over last December when council members first began digging into the incentive plan.
The investigative committee posted the document on its website as it also pressed the city’s Deputy Chief Administrative Officer Stephanie Burch to agree to a sworn interview about her time as a lead negotiator for JEA’s abandoned attempt to strike a deal for a sale.
Burch agreed Wednesday to do an interview under oath. Burch is not a JEA employee, but she served for one month as head of the negotiation committee used by JEA to handle talks in late 2019 with bidders seeking to purchase the utility.
The City Council investigative committee is probing a wide range of matters pertaining to the abandoned attempt to sell JEA, including an employee incentive plan that would have translated to big payments for JEA employees if the utility had been sold.
Diamond, who is chairman of the Investigative committee, said the recently obtained JEA document’s spreadsheet shows the bulk of the financial benefits from that incentive plan would have gone to high-ranking JEA executives.
He said the existence of the spreadsheet contradicts statements by former JEA executives last December that JEA had done nothing to determine which employees would get the biggest benefits from the controversial "performance unit plan."
"This document is the best example that they did not do the correct (records) search we asked for the first time, and this document by any measure is one of the most important documents," Diamond said.
Council member Ron Salem, who joined Diamond last December to convene a meeting about the performance unit plan, said the document reinforces his belief the plan was designed "predominantly for the highest-paid employees to reap the vast majority of the benefits."
"We asked every question we could about the plan, about how the units were going to be divided, and they claimed it was not designed yet and there was nothing they could show us," Salem said. "They obviously had a plan on the design and they just didn’t show it to us."
The performance unit plan, which eventually played a large role in sinking the sales process when ramifications of it became public, would have let JEA employees purchase units and then redeem them in the future based on the utility’s financial performance.
The redemption would have occurred in three years, but if JEA were sold, the benefit would have been accelerated and employees holding the units would have gotten big paydays when an investor-owned utility bought JEA.
RELATED | The investigation into the failed attempt to sell JEA
City Council Auditor Kyle Billy told the council last November if JEA were sold at a price that resulted in a net gain of $4 billion for the city, JEA employees would reap a total of $315 million based on them putting just $1 million of their own money into buying 100,000 units at a cost of $10 per unit.
If a sale netted $5 billion for the city, then JEA employees in the performance plan would cash in $636 million off a total $1 million investment, Billy said in his report to the council.
The amount pocketed by an individual employee would have depended on how many performance units an employee had acquired, which in turn would have hinged on how many units were made available to the employee.
The City Council investigative committee has been pushing for answers on how the performance units would have been apportioned among JEA’s 2,000 employees to see which employees would have had the biggest opportunity to purchase the units and have a shot at the largest financial windfall.
The JEA document recently obtained by the committee shows that back in June 2019, utility executives were looking at a plan in which the bulk of the units would have been set aside for high-ranking employees to purchase as part of an incentive pay program.
Steve Busey, a private attorney hired by City Council to assist its investigation, wrote in an email to the committee that the spreadsheet shows a concept where utility executives would each be able to acquire 1,079 performance units while non-executive JEA employees would be able to each purchase eight to 80 units.
The JEA board approved the performance unit plan at the July meeting when the board also authorized putting the utility up for sale. In December, the board killed the incentive plan, which never went into effect, and also canceled the sales negotiations after ousting Aaron Zahn as CEO.
During the sales process, Burch was the chairwoman of a three-member committee composed of city employees serving as JEA’s negotiation committee.
Diamond sent a letter Wednesday to Mayor Lenny Curry saying Burch had declined to be interviewed unless she was not put under oath. Diamond said all of the council investigative committee’s interview have put witnesses under oath.
"We’re not picking and choosing," Diamond said.
Chief Administrative Officer Brian Hughes later sent a letter to Burch in which he said she had agreed to "appear for a sworn interview" at the direction of Mayor Lenny Curry.
"As we have stated prior, this administration will cooperate with this ongoing investigation, and that includes Deputy CAO Burch," city spokeswoman Nikki Kimbleton said.
She said a letter from Burch’s attorney "was mispresented to the media and the public" about Burch’s willingness to appear before the committee.
Kimbleton said Burch’s attorney advised her to decline testifying "in the immediate future" because she was leading the city’s distribution of $1,000 payments to help residents cover mortgage, rent and utilities if they had lost pay because of the coronavirus-damaged economy.
Kimbleton said Burch’s attorney "merely requested more information from the committee and clearly expressed her willingness to be helpful in this investigation. That includes currently working toward mutually agreed upon terms for an interview."
The former board has been entirely replaced by a new board that started meeting in April and voted Tuesday to bring back retired utility executive Paul McElroy, who stepped down in April 2018, to serve as interim CEO while the board conducts a national search for a permanent CEO.