Cobb EMC took its first steps toward a new era Friday, receiving approval to proceed with long-delayed board member elections and gaining some resolution to the company's future following the tenure of former CEO Dwight Brown.
For members, the elections will be the first opportunity to vote for a new slate of directors since a 2007 lawsuit against the company by a group of customers halted the process. The elections will bring a strong set of challengers, many already announced, who are seeking to unseat the ten current leaders who many members view as complicit in wrongdoing stemming from the lawsuit.
Approval of the elections was made by Cobb County Superior Court Judge Stephen Schuster at a morning hearing.
The first of three rounds of elections, scheduled for Nov. 12, will determine three board positions that govern the Marietta co-operative that serves about 190,000 customers. The remaining seven seats will be decided in elections Feb. 18 and May 12.
Prior to the elections, a membership meeting is scheduled for Sept. 17 to decide whether to allow mail-in ballots in future elections. Members will also vote on whether to limit board members’ compensation and prohibit them from being paid retirement benefits. Vested benefits previously accrued would not be affected.
The election schedule begins the process of bringing in a new board accountable to its members, said Tripper Sharp, one of the original plaintiffs in the 2007 lawsuit. Some customers attending the hearing also hoped new board members would thwart Cobb EMC involvement in controversial South Georgia coal plants.
The elections will also satisfy provisions of a 2008 settlement agreement stemming from the lawsuit against EMC and Brown, the former CEO. The suit cited conflicts of interest and mismanagement between the co-op and a for-profit company, Cobb Energy, which is partially owned by Cobb EMC management.
Brown retired in February as part of the settlement and has been indicted on 35 counts of racketeering, fraud and witness intimidation. Until a few months ago, Brown had still been working for the utility as a consultant.
Schuster had strong words for the board, who attended the hearing, for not participating in the ongoing court proceedings and for the “dawdling” in selecting Brown’s replacement.
The board unsuccessfully sought to rehire Brown but Schuster denied the request in June. The board in July selected longtime EMC executive Chip Nelson to succeed Brown and has declined to provide Nelson’s salary.
“Members and the plaintiffs perceived it as an insult that Brown retired and never left. He stayed in his office ... and continued to draw money from the EMC,” Schuster said. “... barring extraordinary circumstances, he should have been put on a leave of absence and that didn’t happen. That’s all I will say about Brown. We’ve got to move forward.”
Although EMC attorney Dwight Davis assured Schuster that Brown was no longer working for the co-op, the judge requested a full accounting of Brown’s compensation from the Cobb EMC since his retirement, along with monthly meetings with the attorneys about the progress of dissolving the side entities linked to Cobb Energy.
Still to be resolved is whether Cobb EMC can fund the campaigns of the incumbent directors. Cobb EMC attorneys argued that disallowing the financing would be an unfair "muzzling” of the directors’ rights, while the plaintiffs argued the funding would be unfair to members and new candidates.
“Under their proposal the incumbent would have the resources and the challenging members would not,” said Pitts Carr, attorney for the plaintiffs. “So the challenging member would be treated differently and in co-operatives, everyone is required be treated the same.”
Cobb EMC board members are elected for three-year terms and have no term limits. Members receive $600 per day for board meetings, $500 per day for committee meetings and $50 to participate in conference calls. Members also receive health benefits, life insurance and a deferred compensation plan after age 65.
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