Former Cobb EMC CEO Dwight Brown’s compensation from the non-profit cooperative reached $6 million from the time a civil lawsuit against the company was settled in December 2008 to his separation from the company in July, according to information provided by the company.
About $1.2 million of the overall compensation included Brown’s base CEO salary during that time, along with $93,039 in accrued vacation when he retired in February. Brown also received about $59,000 per month, for the five months after his retirement that he was kept on by the company as a consultant.
The total compensation -- including almost $4.5 million in Cobb Energy payments paid out after the settlement agreement in December 2008 and $3.7 million in payouts from employee-contributed retirement and annuity plans -- is about $9.8 million. Some of the accrued vacation and annuity and retirement payments are based on Brown's 31 years of employment at the company.
"I think it's absurd," said Edgar "Bo" Pounds, one of the original plaintiffs and EMC customers in a 2007 lawsuit against the company. When reached by phone Monday night, Pounds had just heard a few of the compensation details. He questioned whether the consultant fees paid to Brown should be returned since the employment was not approved and since Brown had already been indicted.
The Marietta-based EMC provided the information to the media Monday, two days before they are supposed to review the data with a Cobb County judge. Last week, the EMC initially objected to detailing Brown's salary from the time of the December 2008 settlement until his retirement in February because the information was not part of enforcing the settlement agreement. EMC attorney Dwight Davis withdrew his request for reconsideration a few days later.
Cobb EMC is one of 42 electric membership corporations in Georgia. The Marietta company serves about 190,000 customers mainly in metro Atlanta suburbs. Like other co-ops in Georgia and in most states, Cobb EMC isn't regulated like investor-owned utilities such as Georgia Power. They are considered self-regulating because customers own them and elect boards of directors. Instead of overseeing their prices and spending, the state Public Service Commission has limited authority over territorial issues and financing applications. As a member-owned cooperative, Cobb EMC isn't required to give detailed information to anyone, not even regulators, lawmakers, the federal agency that helped create it, or its own customer-owners. Cobb EMC board meetings are not open to its own members. New CEO Chip Nelson plans to unveil some new transparency initiatives later this week.
There is no industry standard for CEO compensation as each co-op sets its own amounts, according to the Georgia EMC trade group that includes the 42 co-ops. Brown's salary was set annually by a board of directors, which also approved the compensation.
The compensation disclosures are part of ongoing fallout from the 2007 lawsuit alleging that Brown and other high-ranking executives improperly profited from establishing a subsidiary for-profit business, Cobb Energy.
As part of the civil suit settlement and Cobb Energy aftermath, Brown received about $4.45 million in a buyout of his Cobb Energy contract, accrued vacation and stock transactions days after the settlement was reached on Dec. 3.
Brown, who led the EMC since 1993 and is currently indicted on multiple charges associated with the suit, retired in February after 31 years of employment at the EMC. He was hired as a consultant and paid $295,167 for the five months from March 1 to July 26.
Cobb EMC has also spent at least $13 million on legal fees over the past four years including spending on the civil and criminal cases, according to EMC leaders and financial documents. Company spokesman Sam Kelly said he was unsure of the current figure when asked Monday. Some of the fees are covered by insurance. Brown is due back in court on the criminal case next month.
The company provided Brown a Georgian Club membership, cell phone and company car for his business and personal use during his CEO tenure; the club membership and cell phone were also provided during his consultant work. The EMC’s CEO is the only employee who receives the company vehicle, said Kelly. Brown’s replacement, Chip Nelson, is currently provided a company car.
The EMC also fully funded the premium for a $500,000 whole life insurance policy with death benefits designated for Brown's heirs or estate. Brown still receives retiree health benefits from the company.
CEO compensation information from comparably sized Georgia co-ops, Jackson EMC and Sawnee EMC, was unavailable by press time.
Brown's compensation has been a sticking point with EMC members pushing for reform within the company. With Brown gone, the next step is to vote the current board of directors out of office and replace them with new directors who will call for a forensic audit of the company. The first of three rounds of elections for the 10-member board is Nov. 12.
“I think this coming out now will be incredibly difficult for the board to explain to the members why they should be re-elected,” said Tripper Sharp, one of the original suing plaintiffs. “Almost $10 million is an incredible amount of money and we’re talking a non-profit co-op, not a Fortune 500 Company. For them to pay that kind of money to the CEO of a non-profit co-op is shocking.”
Cobb EMC and Dwight Brown timeline:
- 2007: A group of EMC customers files suit against the cooperative
- December 2008: a settlement is reached in the civil suit
- Jan. 6: Brown indicted on 31 counts of theft by taking, racketeering, conspiracy to commit fraud, and making false statements associated with the operation of the for-profit firm Cobb Energy
- Feb. 17: Cobb EMC sues customers who filed a civil lawsuit against the board in 2007; the lawsuit was later dropped
- Feb. 28: Brown retires from the EMC as part of the court settlement after 31 years of employment
- March 1-July 26: Brown is retained as consultant for EMC
- March 22: Brown’s 31-count indictment thrown out on technicality
- July 7: Brown is re-indicted on 31 original counts, plus new counts of intimidating witnesses
- July 11: Chip Nelson, Cobb EMC's longtime chief operating officer, selected as new CEO
- Sept. 28: Cobb EMC presents Brown's compensation information to a Cobb County Superior Court judge
- Oct. 10: Next court appearance on the 35-count indictment; Oct. 13: hearing on Brown’s attorneys’ motion to dismiss the case)
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