Open letter to the MEA membership

Normally I don’t respond to articles that misrepresent the truth, but last week the Frontiersman printed a Spectrum opinion piece that begs a response to Matanuska Electric Association members. For folks who are wondering about the assertions made in the Spectrum article, I will respond to the misrepresentations and correct the record.

MEA is a cooperative — the company is owned by the members — that’s you, if you purchase electricity from MEA. By Alaska statute, and in accord with MEA’s bylaws, the affairs of the cooperative are managed by a board of directors. MEA’s board is comprised of members who are periodically elected (staggered annually) by the cooperative’s membership. The board hires a general manager to oversee and conduct the day-to-day affairs of the cooperative subject to the direction and control of the board. By voting for your board members of choice, the members of the cooperative ultimately control the overall direction and philosophy of the board, which in turn has ultimate authority to direct and control the general manager.

The general manager serves and works only in a subservient capacity for the board. The general manager has no authority beyond that which is specifically granted by the board.

MEA’s former general manager apparently didn’t like the idea that sometime in the future, the co-op members might elect different people to the board. If that happened, the new board might then decide to take the cooperative in a direction different than what the previous general manager personally preferred and that could result in replacement of some, or all, of the senior staff. So he gave five of his hand-picked senior managers secret employment contracts without the knowledge or approval of the full board. And what amazing employment contracts they were!

First, the contracts purported to transform the senior managers from “at-will” employees who could be removed without cause and without liability to the cooperative, into employees who could be fired “at-will” only by the general manager while he served as the general manager.

Secondly, the contracts granted each senior manager the right to receive $300,000 to $500,000 in “liquidated damages” if in the future the co-op members elected a new board that might replace the general manager resulting in replacement of those senior managers. If the decision were to fire a senior manager, thanks to these lucrative contracts, it would cost the cooperative upwards of $500,000 per person removed — that is, as much as $2.5 million to replace the five people who were then the cooperative’s senior management.

The self-serving employment contracts were designed by the former general manager and his legal counsel to protect him against the cooperative, his employer. The contracts even required MEA to pay to the senior managers their full costs and attorney fees in any lawsuit they might file against the cooperative to collect their payout, whether MEA won or lost, or whether MEA was right or wrong in removing them from their positions.

Nothing about the contracts served MEA’s interests. All of the senior managers were “at-will” employees when the contracts were granted, and some had worked that way for years. None of the senior managers were looking for other work or planning to leave MEA when they were awarded these contracts.

Most importantly, the contracts were never brought to the attention of the full board, despite the fact that each contract promised a payout exceeding the general manager’s $100,000 contracting authority. Only three of his friends then on the board signed off on the contracts while the other board members were kept in the dark. Three board members are not a quorum; hence, the contracts were illegal from the board’s viewpoint and likely were a violation of the fiduciary responsibility of the signing board members in that they, with full knowledge of the powers granted to the general manager, gave their endorsement to the illegal contracts. The board that discovered the contracts and eventually voted to remove the senior managers and their lucrative contracts has actually saved MEA a lot of money.

So, there you have it. The board discovered the cover-up of contracts given to senior staff and stepped up to the plate and removed the two staff people mentioned in the earlier article and directed me to eliminate the remaining contracts when I came aboard. That board that stepped up to disentangle this unhappy mess deserves applause, not ridicule, for doing its duty. Its efforts are a credit to our membership.

Joe Griffith is the general manager for Matanuska Electric Association.