JACKSONVILLE, Fla. – Former JEA CEO Aaron Zahn will not get a big payout after the JEA Board of Directors on Tuesday voted unanimously to terminate Zahn’s contract for cause.
That means Zahn will not receive the more than $800,000 in severance pay he was promised in his contract after he was removed from the city-owned utility’s top job amid scandals that included a controversial bonus scheme and newly revealed accusations that he altered documents that were presented to the board.
Over the last six weeks, the Office of General Counsel said it had interviewed 30 witnesses and reviewed thousands of emails while investigating Zahn. In a presentation to the board Tuesday, counsel laid out 24 reasons why Zahn deserved to be terminated with cause.
“I listened to the meeting on the web and I heard 24 reasons for cause, and from what I’ve heard and from what I’ve listened to, it sounded like cause was the right decision to make," said Council President Scott Wilson.
Zahn can only continue his healthcare at his own expense, although he has the right to appeal the decision through a third-party arbiter.
The decision comes more than a month after the board voted to remove Zahn a little more than a year into his rocky tenure that included a failed exploration to sell JEA.
“Good to see the JEA Board terminate Aaron Zahn with cause so that he gets no more money from the people of Jacksonville. General Counsel found that Zahn altered documents and lied to me and Councilman Ron Salem in our hearing regarding the disgusting bonus plans. One good step in the right direction,” Councilman Rory Diamond, who is the head of a City-Council led investigation into JEA, said after the decision.
Diamond said that some of the accusations brought against Zahn could result in criminal charges.
“Well, if he had altered documents and presented to the board and they relied on those documents, then there could be a fraud. There’s no question,” Diamond said.
Zahn had been in limbo since the board voted Dec. 17 for his removal and placed him on paid leave. Zahn had been making about $2,000 a day as city attorneys and his lawyer worked out the terms of his departure. JEA’s was then faced with Tuesday’s decision on whether his employment should be terminated without cause or for cause – the difference between him walking away with severance pay or mostly empty-handed.
Deputy General Counsel lays out the case against Aaron Zahn and the 24 reasons why the former #JEA CEO deserves to be fired with cause. The JEA board voted unanimously to do just that. pic.twitter.com/HyhyifhyfZ— Travis Gibson (@TravisDgibson) January 28, 2020
Among the reasons laid out, investigators found that Zahn altered a PowerPoint provided by a third-party consultant and presented it to the board. The board then took official action based on the accuracy of the altered document, the investigation found.
The investigation also found that Zahn failed to “adequately inform and advise the Board regarding the details of the Long-Term Performance Unit Plan (”PUP") and the potential effects a sale would have on the PUP. Zahn is accused of misrepresenting the PUP, providing inaccurate, misleading or biased information to the board and failing to preserve text messages related to JEA business.
Following the decision by the board, Zahn’s attorney John Mullen issued a statement.
“Mr. Zahn is disappointed in the outcome of today’s JEA Board meeting. In the last month, Mr. Zahn has made every effort to cooperate and find an amicable separation in the best interest of JEA, the community and his family. We are surprised at the unprecedented level of political and media interference in business matters of JEA. We expect the results from a full hearing of the facts in front of an impartial arbitrator to be starkly different.”
“The OGC report focuses on Mr. Zahn but ignores the roles that JEA’s Board, the OGC’s staff attorneys, dozens of JEA employees, multiple expert consultants, and myriad specialty legal advisors played in every decision at JEA,” Mullen wrote in a statement later in the afternoon. “The result of the OGC’s “investigation” was – in the currently overheated political and media environment – regrettably predictable, but it certainly was not accurate.”
In a letter sent to the city’s Office of General Counsel on Sunday, Mullen laid out his argument as to why Zahn deserved the be paid severance. Mullen defended his client saying “the underlying facts and evidence demonstrate that there is no legitimate basis for terminating Mr. Zahn’s employment for ‘Cause’ under the terms of the Agreement dated July 23, 2019.”
Earlier this month Zahn’s attorney said the former CEO was taking the brunt of the blame for the controversial bonus plan that would allow employees to buy what amounted to stock options that could pay off handsomely if JEA was ever sold.
Mullen raised those concerns in a three-page letter in which he wondered why JEA’s Board of Directors isn’t standing by its original offer to remove Zahn without cause after he agreed Dec. 30 to a negotiated exit.
While Mullen acknowledged that Zahn accepts his share of responsibility for the utility’s direction, he pointed out that his client did not act alone -- he worked together with the board, paid consultants and JEA employees.
“This was not about vindication. This was about doing the right thing,” said JEA Board Chair April Green. "There were just too many allegations for us not to take the time to investigate.”
The fallout since Zahn’s removal and the Dec. 24 cancellation of a bidding process for JEA has been wide-ranging, including the departures of several members of the utility’s leadership team, as well as State Attorney Melissa Nelson’s decision to hand over her office’s investigation of JEA to federal investigators.
Before he was terminated, his yearly salary was $520,000, the highest salary of any city employee.
“I think we are at the tip of the iceberg,” Randy DeFoor, member of Jacksonville City Council committee investigating JEA, said Monday. “I don’t believe that Zahn acted alone. I think this is much bigger than Zahn. And that’s with this committee will be charged with who did what, when and how did we get here.”
The board recommended the search for the next CEO of JEA begin as soon as possible.
Until then, interim CEO Melissa Dykes will remain in charge but said she will not pursue the role permanently.
“I think not competing for the permanent CEO position gives us a fresh chance to start at JEA,” Dykes said.