JACKSONVILLE, Fla. — “Everybody who needs to understand it understands it.”
This is what a key witness testified Aaron Zahn told her before presenting the bonus plan that landed him in federal court and collapsed efforts to sell JEA — which five of six board members testified they didn’t understand, and Zahn is accused of purposely keeping vague.
Melissa Dykes, who served as JEA’s chief operating officer during Zahn’s tenure, and had served as CFO and interim-CEO previously, testified Thursday. Board meeting videos showing Dykes giving presentations were shown to the jury throughout the seven days of the trial and Thursday was the first time they heard from her directly.
She testified that at the July 23, 2019 meeting where Zahn presented the bonus plan to the board, she believed Zahn had met with each board member to explain the plan to them.
Dykes says that she herself did understand the math behind the plan, and could guess at the sizable bonuses the executives would receive.
But she testified that she “couldn’t believe,” the rest of the board endorsed it — and four years later, still remembers Zahn’s response verbatim.
The five board members who testified said if they had a full understanding of the plan, they would not have voted for it, and the plan most likely would’ve died on the vine.
"He made me the Grim Reaper"
A video of Dykes explaining a grim future for JEA
Responsibility for the botched sale and controversy over the bonus plan has been punted to different people throughout the trial. It’s been posited by the defense that the city auditor was mistaken in their calculations. Or the attorneys who vetted the plan shouldn’t have approved it if it was possibly illegal. Or the Board of Directors should have noticed red flags (if they existed). When videos of JEA board meetings have shown other members giving presentations that back up Zahn’s outlook for the company, the defense has asked witnesses to clarify it wasn’t Zahn or Wannemacher speaking.
One thing the executives are accused of lying about is the financial forecast for JEA, referred to in court as the “doom and gloom” argument or the “death spiral” argument (a reference to a comment made by another board member). A video shown to the jury repeatedly features Dykes giving a presentation on a possible dark future for JEA and laying out what has been dubbed “Scenario 2,” an alternative to the bonus plan. Scenario 2 involved laying off 574 employees and raising rates.
This video was reframed Thursday when Dykes testified that she did not want to give this presentation, and she didn’t even think Scenario 2 was a viable option for the company. She said consulting firm McKinsey & Company had tasked her with helping to craft this scenario by whittling down resources, “literally cutting down to the bone.” But to her knowledge, this scenario was only a theory, an exercise to see just how much cost could be shaved off with JEA still operating. If it had been put in place, she said, vital employees like overnight sewage crews would have been cut.
When the presenter from McKinsey & Company could not deliver the presentation, she said Zahn asked her to do it. Her response: “I told him he was making me the Grim Reaper.”
She said it would mean “cannibalizing” all of the values Zahn and the board agreed on.
The motion passed on July 23 stated that if the board did not go forward with the controversial bonus plan, they would have to fall back on Scenario 2.
Dykes: Zahn wanted to sale to correspond with bonus program
Documents shown to Dykes during her testimony showed that a sale would have ballooned the amount of money poured into the bonus plan.
Throughout the trial, the defense has waffled on whether or not Zahn was married to a sale, reminding the jury that JEA was shopping around for other options. But when asked who had the idea for a sale and the bonus plan to coincide, she had a simple answer: Aaron Zahn.
She also bolstered testimony that Florida Power & Light parent company NextEra was willing to bid $11.05 billion for JEA.
Witness says Wannemacher 'one of the most honest people'
Dykes’ testimony was largely a glowing endorsement for Wannemacher.
While she was largely quizzed on logistics and her experience with the plan, Wannemacher’s attorney, Jim Felman, used her as a character witness.
Wannemacher, who is facing 25 years in prison for allegedly lying, is “one of the most honest people that I know,” she told the court. “He’s always driven to do exactly what’s right, in every part of his life.”
She also testified that he would never mislead Jeff Rodda, a city auditor who was his close friend and was involved in releasing the memo against JEA. (is this true) She said Wannemacher was always transparent with her and would not have lied about the potential payout of this plan.
When shown a spreadsheet called “performance unit plan scratch sheet,” which has been presented as evidence that Wannemacher had done the math and knew exactly how much he stood to gain, Dykes said she had never seen it before. But given a moment to look it over, she testified it was not the same formula used in the bonus plan proposal.
Dykes laid no blame on Wannemacher. She had remarked earlier that there were no numbers in the performance unit plan proposal, making it impossible for board members to figure out the possible windfall on their own. But she told Felman that it’s common not to publicly disclose possible sale prices because it risks tipping off bidders. Was this why Wannemacher didn’t publish numbers? “I assumed so.”
A point was raised during Dykes testimony: Wannemacher was with her before the meeting. If Zahn misled her when he told her that everyone understood the proposal, then he fooled Wannemacher, too.
Zahn’s attorney Eddie Suarez will continue his cross-examination of Dykes Friday. Federal prosecutors will have then chance to question her on redirect.