PHELPS DUNBAR Lo Texas Florida Alabama j North Caro London

JOHN D. MULLEN
Partner
(813) 472-7867 January 30, 2020
John.Mullen@phelps.com

Via Email to: aosiadacz

( firstcoastnews.com

Alexander Osiadacz
First Coast News

Re: Statement on behalf of Aaron Zahn regarding false public allegations

Dear Mr. Osiadacz:

The reporting on performance units for JEA is an aspect of the JEA story that perfectly
illustrates the overheated and irresponsible political rhetoric currently circulating with respect to
JEA and Mr.Zahn. At the January 28,2019 JEA Board meeting, we believe the Office of General
Counsel ("OGC") provided false and misleading information to the Board with the intent of
inducing the JEA Board to terminate Mr. Zahn with cause. The continuation of storytelling
without due consideration of the relevant facts is causing great personal harm to our client, Mr.
Zahn.

In the end, the OGC's January 28, 2020 letter and false criminal allegations in the media
reflect a one-sided attempt by the OGC to come up with something — anything — to justify its client,
the JEA,from having to honor its contract with Mr. Zahn. Mr. Zahn, unfortunately, did not have
an opportunity to view, let alone test any of the so-called "cause" allegations. As the facts
presented below show,the old adage that there are "two sides to every story" is certainly true here.

Fact: The accusation of altering a consultant document by Mr. Zahn is false and easily disproved
by JEA's own documents available on jea.com.

The OGC's January 28 letter finds fault with Mr. Zahn for allegedly: "16) Altering a
document prepared by a third-party consultant, presenting same to the Board in its altered form,
and inducing the Board to take official action based, in part, on the accuracy of the altered
document." Let's set the record straight on this absolutely false allegation. Facts: A consulting
firm, Willis Towers Watson, prepared a draft PowerPoint for use during a presentation to the JEA
Board. The consultant sent the draft to Mr. Zahn for his review and requested comments. Mr.
Zahn prepared several suggested edits for the consultant's review. These comments were provided
to JEA's VP of HR and JEA's Director of Compensation who reviewed and then forwarded the
suggested edits on to Willis Towers Watson on May 7, 2019, for their independent review. On
May 9, 2019, Willis Towers Watson responded in an email stating, "Updated report is attached.
We incorporated all ofthe edits and added some clarifying points around the pay adjustments on

COUNSELORS AT LAW

100 South Ashley Drive, Suite 2000 I Tampa, Florida 33602-5311 I 813-472-7550 I 813-472-7570 Fax phelpsdunbar.com

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pages 31 and 32." Attached to the May 9, 2019 email was a PDF report that incorporated all of
the edits. Willis Towers Watson did not object to or refuse to adopt any of Mr. Zahn's suggested
edits. In fact, they asked additional clarifying questions. The PDF version of the Willis Towers
Watson report provided on May 9, 2019 is exactly what was presented to JEA's Board
members at the June 2019 Compensation Committee Meeting,the June 2019 Board Meeting,
and the July 2019 Board meeting. Neither Mr. Zahn nor any other JEA employee,to Mr. Zahn's
knowledge, edited the final report produced by Willis Towers Watson prior to presenting the
material to JEA's Board of Directors.

There is nothing wrongful about Mr. Zahn, or any other JEA employee, suggesting edits to
a consultant's draft report. This occurs in countless business settings every day. What is
misleading is the OGC's insinuation that there is something wrongful about Mr. Zahn "Altering a
document" and "inducing the Board to take official action." Referring to this faulty premise,
media reports have recently quoted City Council members suggesting that this "could result in
criminal charges," compounding the damage caused by the OGC's false insinuation. There is no
crime and nothing to prosecute, only an ordinary drafting exercise now undergoing scrutiny
because the policy ideas relating to privatizing JEA and providing long-term compensation for
JEA employees have become so politically toxic.

Fact: Mr. Zahn did obtain proper legal advice from the OGC and special outside counsel prior to
presenting an initial performance unit plan to the JEA Board.

The OGC,working with special outside counsel, drafted Resolution 2019-10 and the initial
proposed performance unit plan, which was reviewed and approved by JEA's Board.

Prior to presenting any recommendation on performance units to the JEA Board, Mr.Zahn
obtained a signed legal memorandum from the Office of General Counsel's Jason Gabriel,
Lawsikia Hodges, and Lynne Rhode. (See attached July 22, 2019 OGC Memorandum). This
memorandum clearly states:"The Office ofGeneral Counsel, in consultation with outside counsel,
has reviewed the proposed resolutions associated with each Option (Resolutions 2019-06 through
2019-10), and we believe that the Board is authorized under its charter provisions, subject to
applicable laws, to proceed with implementing through formal action one of the Options, as
presented. The decision to proceed with implementing one of the Options, as presented, is a
business decision for the Board to make and within its authority under the City Charter." An
executed copy of Resolution 2019-10, signed by JEA Board Chair April Green, is attached. The
materials, the presentation by JEA staff, the Board's deliberations, and the definitive language of
Resolution 2019-10 are clear, concise, and comprehensive on the matter. The Board's
deliberations on this matter may be viewed on the video recording of the July 23, 2019 Board
meeting, starting around 02:40:00, available on jea.com.

Given the July 22,2019 OGC Memorandum,the presence of OGC attorneys at every JEA
Board meeting, and the direct and intimate involvement of multiple OGC attorneys at all stages of
developing and implementing the performance unit plan ("PUP"), it is bizarre that OGC's January
28, 2020 letter states as a reason for termination:"7) Causing or allowing the Board to incorrectly
believe that the Office of General Counsel had vetted and approved the PUP prior to and/or during
the Board's consideration of the plan at the July 23, 2019, board meeting." As a reminder, an

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actual OGC attorney was literally sitting at the Board table in the July 23,2019 Board meeting and
even participated in presenting the PUP to the Board. It is preposterous that six months later OGC
could claim otherwise.

ter Board approval, Mr. Zahn and JEA took additional diligence steps to ensure that a
Fact: Af
performance unit plan was developed in the best interest of JEA and JEA's employees.

After receiving Board authorization, Mr.Zahn requested OGC,through Jason Gabriel and
Lynne Rhode, work with special counsel, JEA staff and other advisors to continue to conduct
thorough diligence to ensure that a performance unit plan was developed in the best interest of
JEA and JEA's employees. This request resulted in actions including, but not limited to, additional
OGC, JEA staff, and special counsel review, submission of a formal opinion request to the
Attorney General of the State of Florida, and preparation of a formal opinion request to the State
ofFlorida's Ethics Commission. This contingent approach also was reflected in the July 22,2019
Memorandum authored by Jason Gabriel and other OGC counsel advising that the performance
unit plan "was legal" but at the same time noting such advice was subject to ongoing review by
OGC and third-party experts.

Fact: In the end, prior to any public or political scrutiny, Mr. Zahn, with counsel from OGC,
determined the best course ofaction was to terminate the proposed performance unit plan.

OGC, special counsel, and JEA staff, other than Mr. Zahn, continued their detailed work
to develop the performance unit plan after the July 23,2019 Board meeting through the beginning
of November 2019. It was not until November 5, 2019 that Mr. Zahn was provided insight into
OGC's conclusions. Appropriately, Mr.Zahn swiftly recommended,together with Jason Gabriel's
counsel, that the performance unit plan be terminated. The rationale for terminating the proposed
plan was due to new OGC and practical business concerns that became apparent well after the July
23 Board meeting. Mr.Zahn and Mr. Gabriel continued to discuss the matter and ultimately agreed
that terminating the plan was the best course of action, as reflected in Mr. Zahn's letter to Mr.
Gabriel dated November 12,2019. (See the attached November 12,2019 Memorandum from Mr.
Zahn). It is worth noting that Mr. Zahn's recommendation that the Board terminate the plan
occurred a week ahead of the public and political scrutiny that began with the release of the City
Council Auditor's report on November 18, 2019.

Sincerely,

PHELPS DUNBAR LLP

John D. Mullen
JDM:bms
Enclosures

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