JEA removes CEO Aaron Zahn

Board chair apologizes for hiring Zahn last November

VIDEO: JEA is parting ways with embattled CEO Aaron Zahn only 13 months after he was given the job, but the terms of his exit are still under negotiation.

JACKSONVILLE, Fla. – JEA has parted ways with embattled CEO Aaron Zahn only 13 months after he was given the job, but the terms of his exit are still under negotiation.

The utility’s Board of Directors voted at Tuesday’s meeting to immediately terminate Zahn’s contract, although he was suspended with pay for now while city attorneys and his lawyer hammer out to the details of his departure. The board approved a motion to terminate Zahn without cause but left it to the city’s general counsel to work out details. Under the terms of Zahn’s deal with the JEA, he could receive $500,000 or more if the city cannot prove that he violated his contract.

Zahn, who did not attend the meeting, declined to comment on the board’s decision.

At a news conference held after the meeting, JEA board Chair April Green admitted that hiring Zahn was a mistake.

“We are human. We voted unanimous(ly) on Mr. Zahn’s contract and, at that time, believed that he was the man for the job,” Green said. “Subsequently, we learned that he is not that person. I apologize for that.”

Melissa Dykes, who is the authority’s chief operating officer, was selected as interim CEO in Zahn’s absence. Dykes was on the shortlist for CEO when the board hired Zahn, but she was passed over.

Green proposed firing Zahn for cause, which would have meant he received no severance pay and she was the lone vote against a motion by board member Henry Brown to terminate Zahn without cause. Zahn would collect approximately $842,000 if were terminated without cause, but the board directed the Office of General Counsel to negotiate to avoid that.

Green told the rest of the board she asked Zahn for his resignation Dec. 13. After initially agreeing to resign, she said, he later backpedaled and requested instead that he be terminated without cause.

“I’ve received calls from former employees and board members (who say) that there’s more to this,” she said. “We’re talking about an investigation that needs to be had.”

She said she felt misled about an employee bonus plan that had the potential to pay out hundreds of millions of dollars at taxpayers’ expense if JEA were sold and Zahn’s stake in a property co-owned by a lobbyist.

“The liability must lie with Mr. Zahn,” Green said.

City attorneys said it’s unclear if the allegations against Zahn rise to the point that the board could fire him for cause, noting that his contract sets a high bar and they would need to find evidence of “gross negligence" or “willful misconduct.”

After the board meeting, Green apologized to the community and the utility’s employees.

“I am personally embarrassed. This has been -- I almost used foul language but I won’t -- this has been a show," Green said. “On behalf of the board, we apologize to every employee of JEA. We understand it’s difficult to hear these discussions that ultimately led to the authority that they love and their jobs. I’d also like to apologize to the public. Transparency is key to us going forward.”

Dykes said she was “honored and humbled” that the board is allowing her to serve as interim CEO again. She would not commit to applying to be the authority’s permanent CEO.

Mayor Lenny Curry, who has backed Zahn’s strategic plan to restructure JEA, was not present Tuesday.

“I support the board’s decision today as it relates to CEO Aaron Zahn,” Curry said in a brief statement to News4Jax.

Zahn’s termination follows calls for his removal from City Councilman Matt Carlucci and others. It also comes a day after Council Members Rory Diamond and Ron Salem grilled Zahn and other JEA brass about the mothballed bonus plan.

At Monday’s meeting, Zahn took ownership of the criticism related to the bonus plan, saying he made an error in judgment by proposing it. According to a city council auditor, the plan could have paid out hundreds of millions of dollars instead of the original $3.4 million estimate provided to the board.

WATCH: Council public meeting on JEA Pay for Performance Plan | READ: Zahn’s prepared remarks for City Council members

The shuffle in leadership comes as JEA is in the midst of an invitation to negotiate, or ITN, process to find potential suitors to purchase all or part of the city-owned utility.

“I think everybody needs to take a reset,” Council President Scott Wilson said Monday morning. “Let’s pause let’s get through the Christmas holidays and then, in January, let’s have a conversation about the path forward to make sure our lawyers are up to speed and understand where we are prior to this counsel taking any action.”

JEA is in talks with nine companies that have expressed interest in negotiating to buy all or party of the electric, water and sewer provider for most of Duval County’s residents. Little is known about the process as much of it has been kept under wraps under what city documents have called a “cone of silence.”

“This entire ‘conversation’ on selling the JEA has long lost credibility and fatigued our citizens and stalled our city’s progress on so many other important issues that affect all of Jacksonville’s citizens,” said Carlucci, who over the weekend called for a grand jury investigation of JEA.

Zahn has become a target for the public in recent months as JEA continues to explore the privatization of the city-owned utility. A recent UNF poll found that only 33% percent of respondents approved of the job he is doing while 47% disapproved.

“Of all the public figures polled in this survey, Aaron Zahn is the only one with a net negative job approval,” said Dr. Michael Binder, director of the University of North Florida’s Public Opinion Research Lab. “Clearly, the Invitation to Negotiate and potential sale spearheaded by Zahn has impacted the public’s view of his job performance.”

Zahn was selected by the JEA board to become the interim CEO in April 2018 and was named permanent CEO in November 2018. Zahn came under fire for lack of experience, but his commitment to the community was cited by several board members as his strongest attribute. Zahn also had the unwavering support of Mayor Curry.

“The departure of Aaron Zahn as CEO of JEA may create the impression that this is the end. In fact it may very well be the beginning," said News4Jax political analyst Rick Mullaney. "There will be a lot of unanswered questions. What is the future leadership of JEA going to look like? What about the future of the board? one of the biggest questions, of course, is what is the future of the sales process itself? Is it going to be terminated and are we going to start all over?”

Earlier this month the JEA replaced all four members of the negotiations team evaluating proposals to buy all or part of the city-owned utility with non-JEA employees to avoid a state ethics probe of conflict of interest. Despite being controversial, the JEA’s plan to give employees performance bonuses to retain them a pending sale were approved through collective bargaining and by City Council. A Performance Unit Plan that would have allowed employees to buy invest $10 in order to earn a share of future profits of the utility was withdrawn at Tuesday’s board meeting.

Ultimately, the sale of JEA would have to be passed by City Council, signed by the mayor and approved by the voters of Jacksonville prior to the sale being finalized.

Board chair apologizes for hiring Zahn last November.

About the Author:

Jim Piggott is the reporter to count on when it comes to city government and how it will affect the community.