As the director of employee services at JEA, Pat Maillis said she would have expected to be involved in developing the incentive program the public utility’s board approved in July 2019 for JEA’s 2,000-plus employees.
Testifying Feb. 26 in the criminal trial of former JEA executives Aaron Zahn and Ryan Wannemacher, Maillis said she was watching the July 2019 board meeting online when, to her surprise, the board considered and then approved the plan.
She said her involvement in the proposal had been limited after its early stages and she had not been shown any finalized documentation on the version of it.
“I did not know it was going to the board,” said Maillis, whose duties as JEA’s director of employee services for the last 10½ years include overseeing benefits and compensation.
Maillis testified that she had concerns about the plan, including that it could yield conflicts of interest in which people with insider information could receive unfair advantages from it.
Much of the testimony Feb. 26 focused on the performance unit plan, which has become known as the PUP.
The stated purpose of the plan was to create “performance units” similar to stocks in private companies. Those units would be offered to JEA employees at $10 a unit, with the value designed to increase or decrease based on the utility’s financial performance.
The JEA board approved the PUP and voted to initiate a potential sale of the utility in the same July 2019 meeting.
Prosecutors accuse Zahn and Wannemacher of circumventing staff and consultants to create the incentive program and clouding information that it would pay the two tens of millions of dollars if JEA were sold to a private company.
The government contends Zahn and Wannemacher also misled board members about the financial condition of JEA to convince the board that it needed to be sold.
Former City Council auditor Kyle Billy testified that his staff began asking JEA questions about details of the plan and its potential budget impact not long after the July 2019 meeting. The auditor’s office is responsible for monitoring and reviewing the budgets of independent agencies affiliated with the city, such as JEA, the Jacksonville Transportation Authority and the Jacksonville Aviation Authority.
On Nov. 18, 2019, with many of the office’s questions unanswered, Billy issued a memo sounding an alarm about the potential payout of the PUP.
Billy’s memo came after Zahn announced that JEA leadership was indefinitely postponing implementation of the plan.
Defense attorneys have made an issue of the timing of Billy’s memo, arguing to jurors that Zahn was the target of political retribution for bringing innovative ideas and a private-sector mentality to an entrenched bureaucracy that led and oversaw JEA.
Zahn came to JEA with experience in finance and investment but none in a public utility.
Asked by Assistant U.S. Attorney Chip Corsmeier about the timing of the memo, Billy said he issued it because the plan had not been formally rescinded by the JEA board and therefore could still have been adopted. He said Zahn issued a letter announcing the postponement but ended it by saying it would be the last word on the matter “until further notice.”
The board would later rescind the plan and halt the sale proceedings, leaving JEA under city control and the performance units never offered or paid off.
Council Auditor Kim Taylor, who served as Billy’s top assistant before succeeding him in 2020 after his retirement, testified that the office’s concerns included that the PUP appeared to have an “unending value” and could be “limitless on the amount of value” they paid to recipients.
She also raised concerns similar to those of Maillis, saying the value could be affected by decisions at the executive level about the direction of the company.
Eddie Suarez, an attorney representing Zahn, asked Taylor whether a Council member had asked Billy to write the memo. He also questioned her about an email that Billy sent to staff before he issued the Nov. 19 memo, which provided blanks that would be filled in by staff based on responses to their questions to JEA. Taylor described Billy’s email as providing a “framework” for the memo.
“Do you draft your memos normally before you even get answers to your questions?” Suarez asked.
Zahn and Wannemacher are on trial in the Bryan Simpson U.S. Courthouse, with U.S. Senior Judge Brian Davis presiding. The trial features two separate juries, with one each for the two defendants.
In other testimony, a consultant who worked with JEA on the employee incentive plan testified that his firm had not delivered a finalized version of the proposal before it was approved.
David Wathen, a managing director with the Willis Towers Watson consulting group, testified that his firm had provided a draft “straw man” report to JEA that needed further discussion and refinement. Wathen testified that after seeing media reports about the plan after the fact, he wrote a letter to JEA emphasizing that the report had not been finalized.
Wathen further testified that the report was presented on the assumption that the JEA would not be sold while the incentive plan was in effect.
The trial is scheduled to resume Feb. 27 with Billy on the witness stand.