Carmony defends MEA contracts

PALMER — Former Matanuska Electric Association general manager Wayne Carmony took the witness stand Thursday in the civil trial at which his former employer is suing him to recover a settlement paid out to two former executives.

MEA’s board of directors fired Carmony in spring 2009. Prior to that, the board had ordered him to fire IT director Bruce Scott and assistant general manager Tuckerman Babcock.

Scott and Babcock later sued the electrical cooperative, claiming they were owed severance pay the co-op refused to give them. Those suits have since been settled, but in the meantime MEA filed a lawsuit against Carmony seeking to hold him fiscally responsible for that severance pay.

So far, the trial seems to come down to one question: was Carmony acting within his authority when he offered contracts to top executives that granted them hundreds of thousands of dollars in severance pay if anyone but Carmony fired them without a good reason?

On Thursday, Carmony defended those contracts. His replacement at the utility, Joe Griffith, has said publicly that there was no need to offer the executives the contracts since they all seemed perfectly happy staying in their jobs. The argument from Carmony’s side has been that politics at the utility, where different interest groups have vied for control of the board of directors, created an unstable climate under which the executives were constantly fearful about remaining employed. Without some kind of assurances or incentives, the executives would find work elsewhere.

“One or two of them, I felt, were going to bolt at any time,” Carmony said. “I couldn’t afford to lose these people.”

In his view, Carmony said, he had two options. He could try to reduce the stress caused by that unstable environment or he could try to up the executives’ compensation. He didn’t have a lot of latitude where compensation was concerned, so he worked to give the executives contracts that would provide for them fiscally if they were fired.

“The employees needed some of the protection that I had,” he said, referencing provisions in his own contract.

He said the idea was that if a new board decided it wanted the executives gone, they’d have enough compensation to give them time to find another job and not have to say to a potential employer that they had just been fired. The board could make it clear if it wished to see the executives gone and that “you’re going to be miserable as long as you’re going to be here.”

His attorney, James Gorski, asked if Carmony believed he was acting within his authority. Griffith has argued that since the payments were more than $100,000, Carmony needed to get the approval of the board of directors, which he didn’t do. Carmony said that in his understanding, his duties as general manager included negotiating these kinds of contracts.

“There was an expectation that I would do this,” he testified.

He said he was very careful in the negotiations not to get the utility into a situation he couldn’t extricate it from, and to protect himself from potentially empowering his executives too much.

“Sometimes people change when they perceive they have extra leverage with the boss,” he said. So he made sure “we would have a contract that I could unwind at anytime.”

In the end, he said, he’s sure he did the right thing.

“I’ve always been very comfortable with these contracts,” Carmony testified.

Also on Thursday, jurors got a look inside of Carmony’s own contract. Attorney Stephen Ellis, who helped draw up at least two iterations of that contract, testified that if Carmony had been fired without a good reason the co-op would have had to pay him whatever was left in the five-year term of the deal.

One of the attorneys representing MEA, Kevin Clarkson, pointed out a provision that said that if Carmony was fired as a result of negotiations with another organization — i.e. the IBEW union or Chugach Electric association — it would not count as a good reason and thus he’d get that settlement.

“It’s in Mr. Carmony’s interest to have disputes with the IBEW because if he gets fired he can say it was because of the IBEW and he can collect this whopping $2 million,” Clarkson said.

Ellis disagreed that Carmony had an interest in getting fired.

“He would have to find other employment and it wouldn’t reflect well on Mr. Carmony that he was fired.”

Contact Andrew Wellner at andrew.wellner@frontiersman.com or 352-2270.