City Council member Ron Salem will end his push to require JEA employee bonus plans receive city lawmakers’ approval after the utility removed its CEO and top executives from its pay-for-performance program.
Salem said in a phone interview June 23 that he will withdraw his legislation calling for a voter referendum to amend JEA’s charter to mandate JEA employee bonuses receive a vote from both the utility’s board of directors and Council.
Salem said his concerns were satisfied after the JEA board voted June 23 to move control of the bonus program from the utility’s CEO to its board.
The board’s action also removes JEA’s senior leadership team from the program and includes the plan in JEA’s annual budget submitted to the Council Auditor.
“None of that was in place before. All of that is action points that we’ve negotiated in the last few weeks to avoid the (voter) referendum,” Salem said. “I’m ecstatic about the process we’ve made.”
Salem filed Ordinance 2020-0245 on May 6, but agreed to defer the bill while he worked with JEA board member Marty Lanahan and interim Chief Human Resources Office Angie Hiers on changes to the program’s policy.
The bonus was created in 1990 as an incentive for employees to meet or exceed operational efficiency goals.
The pay-for-performance bonus plan historically has a $3 million to $7 million annual payout to JEA employees based on the utility’s operational and management savings, according to JEA documents.
Salem’s concern stemmed from a failed Long-term Performance Unit Plan initiated by former JEA Managing Director and CEO Aaron Zahn.
Council auditors found in November that the plan could have cost JEA up to $636.6 million if the city-owned electric and water utility had been sold to a private company.
Like the long-term incentives, the JEA board gave control to the CEO of the implementation and financial structure of the short-term bonus plan.
In 2017, former CEO Paul McElroy was in charge of implementing the plan but he was not included in the program and did not receive a payout.
McElroy is back as the interim JEA CEO and supports the changes.
Zahn was given the authority in 2019, and the pay-for-performance incentive was included in his employment contract approved by the board in July 2019. Zahn also was authorized to create the PUP bonus.
According to a JEA spokesperson, Zahn’s contract was the first time a JEA chief executive was able to benefit from the bonus.
JEA documents that break down the pay-for-performance plan’s FY 2019 financial information show the utility estimated a $4.96 million payout to 1,955 employees last year. The payout includes eligible retirees and represents 3.04% of all JEA salaries.
That was based on $15.13 million in operational and management savings, according to the documents.
The payment structure is based on salary, meaning bonuses for senior leadership were higher than for nonexecutive employees.
In 2019, the utility’s 13 executives received $191,146 through the program.
Individually, Zahn received $31,224; former President and Chief Operating Officer Melissa Dykes received $25,321; and former CFO Ryan Wannemacher, $22,156.
All three have been fired from JEA because of their roles in the utility’s failed push to privatize and the long-term incentive plan.
The board’s decision June 23 caps the fiscal year bonus payout at $8.34 million and is eligible to all nonexecutive-level full-time employees.
The board also approved a change in the payment structure, making all employees eligible for the same bonus percentage not to exceed 5% of their base salary.
“This is an incredibly thoughtful plan. I’m highly supportive of having this kind of incentive pay,” said JEA board Chair John Baker. “I think it’s very appropriate that the senior leadership team and the managing director not participate in it.”