Executive Excess?

October 23, 2012
5 mins read

Jacksonville pays almost $4 million a year to the top five executives in the four major independent city-owned authorities, prompting some officials to ask if their pay is too high, while others contend that hiring and retaining the best talent takes big bucks.

The city’s major utilities, which control our electricity, water, sewer, airport, seaport, roads and mass transit, have come under scrutiny for doling out six-figure paychecks to their top executives, while average city workers lose their jobs and take pay cuts, and the city scrimps to provide basic services.

The JEA, which supplies the city’s electricity, water and sewer service, has the highest paid executive among the city authorities, and ranks No. 1 in pay to its top five executives, paying out $1,065,567 a year. It is closely followed by JaxPort, which operates the city’s seaports and gave its top five executives $1,005,646. The Jacksonville Transportation Authority, responsible for city buses and roads, pays its top five $981,781 a year, and the Jacksonville Aviation Authority pays its top executives $902,425.

City Council Finance Chairman John Crescimbeni believes the authorities might be getting too big for their britches.

“I have the intention of doing everything we can to make the independent authorities a little less independent,” he said. “I think they are tuned out.”

Jacksonville attorney Stephen D. Busey, who served two years on the JaxPort board, said it is necessary to give authority executives adequate pay for the special expertise they possess.

“Being the CEO of the independent authorities is comparable to being CEO in a private industry,” he said in an email.

The highest paid executive among the independent city authorities is JEA’s new CEO Paul McElroy, who earns $381,000 a year after receiving a $166,000 raise. McElroy was JEA’s chief financial officer for a decade before moving into the top spot on Oct. 1. He was the second choice of the JEA board, which agreed to hire Pittsburgh energy executive Joseph Belechak for $400,000 a year, but he backed out at the last minute, saying his family wanted to stay in Pennsylvania.

After naming McElroy, the board offered to match what it had offered Belechak, but McElroy said that was too much money for the Jacksonville market. He agreed to a yearly salary of $381,000. Before his promotion, he was making $215,010 a year. McElroy is replacing longtime JEA CEO, Jim Dickerson, who earned $364,197 and is retiring Feb. 1.

McElroy told the board the higher pay would have been a distraction while the utility is seeking to rebuild its customer satisfaction. J.D. Power and Associates ranked JEA second to last in customer satisfaction among midsize power companies in a survey.

Ashton Hudson, chairman of the JEA board, defended McElroy’s pay.

“I think it is important that we pay the position,” he said. “We should pay a market-based compensation at every level of the JEA,” Hudson said.

The board benchmarked McElroy’s salary by checking against those paid by the Large Public Power Council and the recent Towers Watson compensation survey, which shows McElroy’s salary is 30 percent below the average CEO salary of $544,033 at comparably sized industry and utility organizations, he said.

Jane Upton, a spokeswoman for JEA, said McElroy is underpaid when you compare his pay with other public utility executive officers. She noted that JEA is the seventh largest municipality-owned electric utility in the country.

There are seven CEOs in the Large Public Power Council (LPPC), who make more money than McElroy, with the highest at $750,000. The average CEO pay in the LPPC is $363,933, she said.

Eleven of the 23 CEOs in the LPPC also control a water utility like JEA, Upton said, “which adds significant complexity and scope to the role of CEO.”

By contrast, Lew Hay, the CEO of NextEra, the parent company of Florida Power & Light earns a whopping $22.5 million a year.

At JaxPort, the audit committee had recommended that Paul Anderson, the port’s chief executive officer, be given a 5 percent raise to $336,000, plus a $50,000 bonus, but he asked that the board table any recommendation of a salary increase and bonus.

“I greatly appreciate the board members’ recognition of my accomplishments and understand the potential difficulty in rewarding me monetarily in light of the economic challenges of the day,” Anderson said in a statement at a board meeting. “I must ask you to delay any further conversation about my compensation and potential performance bonus based on my goals.”

JaxPort pay levels are based on compensation for similar positions at competing ports (Savannah, Charleston, Norfolk), said Nancy Rubin, a spokeswoman for JaxPort.

Bill Johnson, the head of the Port of Savannah, one of JaxPort’s biggest competitors, makes $262,000 a year, and Jim Newsome, president and CEO of the South Carolina Port Authority, makes $350,000.

Busey defended all of the six-figure salaries as well as the proposed increase for JaxPort’s chief executive.

“At the port we needed an executive who had leadership experience in the maritime industry, could run the port, attract new shipping business and had the connections to obtain the hundreds of millions of dollars of state and federal dollars necessary for the port infrastructure and channel deepening,” Busey wrote in an email to Folio Weekly.

“This is a high-powered skill set which does not come cheap. We were fortunate to find Paul Anderson, who already has enhanced the port with his leadership, connections and capital raising. Paul’s salary is a good investment for the community and already has produced good returns.

“Criticizing six-figure salaries for the authorities’ CEOs is simply an easy political cheap shot,” Busey said.

Last week, the Jacksonville Transportation Authority board hired Nathaniel Ford, who led transit systems in San Francisco and Atlanta, as its new executive director. JTA officials are still negotiating his contract. Michael Blaylock, the current executive director and CEO, who has resigned, is making $287,160.

At the Jacksonville Airport Authority, Steven Grossman, the executive director, gets a yearly salary of $279,999. In comparison, Jose Abreu, director of the Miami-Dade Aviation Department, which operates Miami International Airport and four general aviation airports, makes $252,905, a year.

District 1 Jacksonville Councilman Clay Yarborough said independent authorities should look at the political landscape before approving high-dollar wages and bonuses.

“Given the current financial distress, boards and commissions who consider CEOs’ contracts for approval would be prudent not to include provisions guaranteeing bonuses and pay raises when their respective municipalities, and even the state legislatures, are making cuts like those of the day,” he wrote in an email to Folio Weekly.

“The arguments that higher compensation is necessary in order to attract better talent might have merit, but when it is used as justification to give raises and bonuses at the wrong time, it erodes the public’s trust/support from an agency’s real work,” his email said.

The JEA actually produces money for the city, providing $83.9 million from the electric services and $22.7 million from the water services. In addition to those fees, the city receives franchise fees totaling $31.3 million for the electric service and $9.9 million for the water. The city provides $1.3 million to the Jacksonville Transportation Authority and $5.2 million to JaxPort, according to figures supplied by the mayor’s office.

In addition to the four authorities, ?several other public officials bring home healthy salaries.

Six lawyers in the Office of General Counsel, which serves as the law firm representing city and county departments, will receive a total of $895,053 in the upcoming fiscal year. It is the same pay they’ve received since fiscal 2010. City General Counsel Cindy Laquidara will receive $200,419.

Steve Wallace, the outgoing president of Florida State College of Jacksonville, has secured a $1.2 million golden parachute from the college’s board of trustees.

John Delaney, president of the University of North Florida, receives $375,000 in pay and $236,090 in bonuses and other compensation for a total of $611,090.

Outgoing Duval County Superintendent Ed Pratt-Dannals receives $275,000 a year. His successor, Nikolai Vitti, is still negotiating his contract.

Congresswoman Corrine Brown is paid $174,000 a year, while Mayor Alvin Brown receives $139,214 a year.

One man not upset by the rising executive compensation is John Keane, the executive director of the Police and Fire Pension Fund. His contract calls for him to be paid an average of the salaries of the top executives at the Jacksonville Port Authority, Jacksonville Transportation Authority and Jacksonville Aviation Authority or $283,000, which is $44,000 more than last year. Keane did not return calls for comment.

Crescimbeni thinks the boards of the authorities, which are appointed by the governor and mayor, might be out of touch with economic reality.

“I don’t know what remedies we have, but we’ll see what we can do.”

Folio is your guide to entertainment and culture around and near Jacksonville, Florida. We cover events, concerts, restaurants, theatre, sports, art, happenings, and all things about living and visiting Jax. Folio serves more than two million readers across Jacksonville and Northeast Florida, including St. Augustine, The Beaches, and Fernandina.

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