The next step in the years-long saga is for Cobb Superior Court Judge Stephen Schuster to take input from both the plaintiffs who sued the electric cooperative in 2007 and the EMC directors, and set a schedule for member meetings and elections.
The sides are to make their recommendations to Judge Schuster within 30 days.
The terms of the December 2008 settlement between the sides stated that members must meet — in person — within 60 days to decide whether mail-in ballots may be used in electing EMC directors.
To be clear, mail-in ballots are not the same as proxy voting. A proxy gives someone else, like a relative or the board of the directors, the power to vote for a member. Proxies are commonly used for shareholder votes of large public corporations. With a mail-in ballot, members still vote however they wish, but do so on a piece of paper that is mailed in.
Cobb EMC is a nonprofit electric cooperative owned by its member-customers and governed by a 10-member board of directors. Directors, who each represent a portion of the EMC service area, serve three-year terms.
The elections that are
supposed to occur annually have been postponed since 2008, so all 10 directors could be considered for reelection now — though whether that will happen all at once or over a number of years remains to be seen. The bylaws allow directors to remain until they retire or are replaced.
Their elections are staggered so that the seats for areas 1, 6, 7 and 10 are elected one year, and were last due in 2008; areas 2, 3 and 9 the next year, last due in 2009; and areas 4, 5 and 8 in the third year, last due in 2010.
The plaintiffs want all 10 director seats to be up for election at one time while preserving the staggered terms. To do that, four directors would be elected for three year terms; three would be for two-year terms; and three would be for one-year terms, said Pitts Carr, the lead attorney for the plaintiffs.
He will include such a schedule in his recommendations to Judge Schuster, he said.
Dwight Davis, the lead attorney for the EMC directors, declined to say what election timeline his clients are hoping for, though he did say his clients would not ask for reconsideration of Monday’s Supreme Court ruling.
“The directors are ready to move forward. The first thing scheduled is this meeting to decide whether we’ll have mail-in ballots,” said Davis, a partner in Atlanta’s King & Spalding law firm. “As for the rest of the elections, things will flow from that decision.”
Cobb EMC provides power to about 190,000 members in five counties.
According to its 2010 annual report, the cooperative had net income of $43 million, on operating revenues of $690 million and operating expenses of $621 million, and after taxes and other expenses. That is up significantly from 2009, when the EMC’s net income was just $3.5 million, on operating revenues of nearly $641 million and operating expenses of nearly $603 million, less other costs.
The cooperative’s assets in 2010 totaled $928 million. The 2009 assets were $924 million, according to financial data on the EMC’s website, cobbemc.com.
Butch Thompson, Bo Pounds and a handful of other co-op members sued the Marietta-based electric cooperative in October 2007, alleging breach of fiduciary duties, gross mismanagement, waste of corporate assets and unjust enrichment in relation to the management and operations of the nonprofit co-op and leaders’ for-profit creation, Cobb Energy.
The Dec. 2, 2008, settlement brought Cobb Energy back under the umbrella of the co-op, transferred back to EMC $112 million in assets from Energy, and mandated President and CEO Dwight Brown to retire by February 2011. On Feb. 28, 2011, the directors announced they wanted to rehire Brown — which the plaintiffs are fighting — and they are awaiting Judge Schuster’s ruling on that issue.
Last January, a Cobb grand jury indicted Brown on multiple counts of theft, racketeering and making false statements. The indictment was later dismissed on grounds it was not delivered in open court, as required.
District Attorney Pat Head said this week that quashing an indictment, as Brown’s criminal attorneys have sought to do, is “one of those rare times where the state has an absolute right to appeal.” His appeal will be heard by that court, or, if the justices determine there is no constitutional issue, they could transfer to the Court of Appeals, Head said. Brown’s lawyers are trying to move it to the Court of Appeals, he said. The court has not scheduled arguments yet, he said.
The 2008 settlement also included how members could propose changes to voting going forward and set a schedule for future member meetings, including postponed elections of directors.
On Dec. 12, 2008, however, directors, without notifying members, amended the bylaws to allow for proxy voting at member meetings where the election of directors was not on the agenda. Previously, EMC members voted in person at the co-op’s truck barn. That was the issue the Supreme Court rejected last week.
Larry Chadwick has been chairman of the board of Cobb EMC since 1988, and first joined the board in 1982. According to his biography, Chadwick, who lives in Roswell, is also on the board of Oglethorpe Power Corp. and is chairman of Black Diamond Coal.
Chadwick represents area 9, which is mostly Cherokee County, above Little River.
Here are the other directors and their areas. Biographical information comes from Cobb EMC’s website.
* Don Barnett, area 1: southwest Cobb between Dallas Highway and Powder Springs Road, and below West Sandtown and Casteel Roads. Some Paulding customers are also in this area. Barnett lives in Powder Springs and has been on the board since 1999.
* David Herndon, area 2: a heart-shaped portion of Cobb between Dallas Highway and Powder Springs Road, but above West Sandtown and Casteel. Herndon, who lives in west Cobb and is a deacon at Roswell Street Baptist Church, has been on the board since 1994.
* David McGinnis, area 3: below Cobb Parkway and Powder Springs Road. He lives in Marietta and is president of Security Exchange Bank. He’s been an EMC director since 1989.
* Johnny Gresham, area 4: east of Cobb Parkway and up to Post Oak Tritt Road. He’s been a director since 2006. The former state representative lives in east Cobb. Gresham also is a former longtime member of the state DOT Board.
* Kay Anderson, area 5: above Post Oak Tritt Road and over to Bells Ferry Road and up to Cherokee County’s Little River. She’s been an EMC director since 2006. She retired as director of Cobb County Department of Family and Children Services, and she lives in Roswell.
* Al Fortney, area 6: northwest Cobb between Cobb Parkway and Bells Ferry Road. Portions of Cherokee and Bartow counties are included. He lives in Woodstock and owns Fortney Sales Co., in Kennesaw. He has been a director since 1999.
* R.J. Patel, area 7: central Cobb, below Cobb Parkway, east of Old Mountain and Due West roads and down to Dallas Highway. Patel is a former chairman of the Cobb Chamber of Commerce’s northwest area council. He was appointed a director last fall to succeed Frank Boone, who died.
* Sarah Brown, area 8: west Cobb from Dallas Highway to Cobb Parkway, west of Old Mountain and Due West roads. Portions of Paulding and Bartow are included. She’s been on the board since 1979 and is its vice chairman. She is also a trustee emeritus of the Kennesaw State University Foundation. Brown lives in Powder Springs.
* Henry Balkcom III, area 10: Cobb EMC’s Pataula District in south Georgia, serving portions of Quitman, Clay, Randolph and Calhoun counties. Balkcom was a director of Pataula EMC from 1986 until March 2005, when he was appointed by that board to represent the Pataula District on the Cobb EMC board. He is a professional engineer who lives in Georgetown, Quitman County.