EMC general manager responds to critics
A committee of disgruntled members of the Grady Electric Membership Corporation has launched a petition drive in the hope of obtaining signatures from a minimum of 10 percent of the approximately 13,100 members of Grady EMC in order to elect a new board of directors and eject the current management.
The group is calling itself the “Take Back Our Grady EMC Committee” and has made petitions available at the three locations of Deep South Guns and Pawn in Cairo, Thomasville and Bainbridge. Deep South Guns and Pawn is owned by Cairo businessman Gordon Clyatt, who says he is a member of the committee.
Grady EMC’s coverage area includes Grady, Decatur and Thomas counties.
The committee paid for and has published ads in the July 23 and July 30 editions of The Cairo Messenger questioning certain financial issues at the EMC, including the salary of former EMC President and General Manager Thomas A. (Tommy) Rosser; the purchase of United National Bank stock and the subsequent sale of that stock to Rosser; a $375,000 loan made to Rosser for the purchase of the bank stock now owned by the EMC; the practice of EMC mechanics working on Rosser’s personal vehicles; and Grady EMC being party to a lawsuit over $2 billion in patronage capital held by EMCs in Georgia.
In an interview with The Messenger Monday, new EMC President and General Manager Thomas A. (Bo) Rosser Jr., and EMC Manager of Member Services Donnie Prince shared information on some of the issues raised in the committee’s advertisement.
“Grady EMC is in the best financial position today than ever before in its 75-year history. I attribute that to the vision and leadership of our board of directors. They have always placed the members first in every decision,” Bo Rosser said.
The new EMC head, who took office earlier this year and is the third generation of the Rosser family to lead the EMC, noted that the EMC is audited and reviewed by third parties annually, much more so than many other businesses.
Rosser said that a co-op is the “best business structure” and he said the members of the co-op directly influence decisions by electing their fellow members to the board of directors.
“It is the stable, consistent leadership of our board and the hard work of our employees that have make Grady EMC successful. One thing I would agree with the committee on is that we have the best employees in the state,” Rosser said.
Rosser discredits the committee’s allegation of widespread dissatisfaction with the management of Grady EMC. He said if the membership was not satisfied there would have been complaints raised at the annual membership meeting held each October or complaints filed with board members.
“We would not have been as successful as we have been if we were not serving our members,” Rosser said.
With regard to the EMC’s purchase of stock in United National Bank, Rosser, whose father is a founding director of the bank, said the EMC board invested in the new bank to support the locally owned bank.
“A local bank supports the community and the profits are redistributed into the community, and the board wanted to support the bank. Board members and other businesses made similar investments,” Rosser said.
When asked if his father recommended the stock purchase to the board Rosser responded, “I would assume he did. As a founder he would feel it was a good investment, but the board makes all of the decisions independent of the president.”
Rosser said the EMC’s primary business is the buying and selling of electricity, so in 2003 or 2004 the board decided to sell the bank stock.
“The board had helped get the bank started and decided it was time to move on and get out of the investment. There was a third party review and evaluation of the stock,” Rosser said.
According to Rosser, the review was done by Richter & Company.
Rosser’s father, the former EMC president, expressed interest in purchasing the stock and the board agreed to loan him $375,000 to purchase the stock, which the EMC had originally bought for $10 per share.
According to Bo Rosser the stock was sold to his father at a cost of $15 per share, which represented a 50 percent capital gain from the sale of the stock in addition to the interest on the note, which according to federal tax returns was set at 4.20 percent. The tax returns indicate the stock was sold in 2004, but the loan is not reflected in the EMC’s tax returns until 2006.
According to Bo Rosser, payments on the loan were originally on a 10-year amortization schedule but were modified by the board at Tommy Rosser’s request and to make the note a balloon.
Bo Rosser said the first payment of $41,294 was made in December 2006, which is less than the $46,884.97 payment outlines in the terms of the repayment reflected in the 2006 Grady EMC 990 federal tax return.
According to Bo Rosser, the board set the annual payments at $35,000 in 2007 with the balloon to be paid at maturity, which is Dec. 31, 2014.
Rosser also stated that the loan is secured but, according to the federal tax return, security provided by the borrower is marked “N/A.”
“This loan is secured and has been disclosed every year since 2004. In addition, it has been reviewed annually by the board and will be paid in full on Dec. 31, 2014, as per the original agreement,” Bo Rosser said this week.
He also said the board decided to sell the chunk of stock to Tommy Rosser because of his “credit worthiness” and due to the fact it would have been “hard to move that much stock” at one time.
Rosser also addressed the total compensation paid to his father. He said the totals were “skewed” because of benefits. The EMC general manager said the most appropriate way to compare EMCs is by assets and not by customers.
In the committee’s advertisement, the group highlighted the total compensation paid to Thomas A. Rosser in 2011 as being $368,249, which was $123,255 more than the general manager of Mitchell EMC and $187,347 more than the manager of Three Notch EMC in Donalsonville.
Rosser suggested that a comparison of general manager compensation for similar sized EMCs such as Sumter EMC, Irwin EMC, and Excelsior EMC would show that Rosser’s pay as the former general manager was not the highest or lowest among his peers.
The 2012 990 federal tax forms indicate the general manager’s salary at Sumter EMC was $337,502; Irwin EMC’s general manager salary was $252,429; and the general manager at Excelsior EMC was paid $362,870. The 2012 990 filed by Grady EMC shows Tommy Rosser’s total compensation being $329,473.
Bo Rosser said it was also misleading to compare the salary of a 20-year veteran general manager with a newly hired general manager as was the case at Mitchell EMC.
Bo Rosser also said that his father remains employed by the EMC in an advisory position that will last up to three years. Rosser also said that transitions from one general manager have been handled similarly by the board for the last 60 plus years.
According to Bo Rosser, the board approved a decrease in his father’s salary of approximately 15 to 20 percent and his salary was increased by the exact dollar amount. Bo Rosser declined to say what his salary is, but noted that it would be made public in the 2014 EMC tax return.
He said his salary is “less than the average salary for a similar sized cooperative.”
The new EMC president and general manager also discussed the major renovations of the co-op’s headquarters on U.S. Hwy. 84.
“The building had no major renovations in 60 years, and it had a flat roof that had experienced deterioration and was leaking badly. This renovation was way past due,” Rosser said.
The board decided to begin the project in 2009-2010 and to use the existing foundation and structure but to install a new roof. “Many may not realize the structure is no larger than it was before. We just put a roof over it all and so it looks larger,” Rosser said.
He said the project took longer because the EMC utilized its employees to do much of the work ranging from wiring to cabinetry to mason work. “We did as much as possible in-house to save on cost,” Rosser said.
The EMC chief said that the renovations were also completed without having to relocate to other offices. “If we could have moved out, it could have been done much faster, but we stayed in the building and worked on one section at a time before moving on to the next. By doing it this way, we reduced the expense to the membership. We’ve had nothing but positive comments on it and it should last another 50 years,” Rosser said.
Rosser said that the co-op has invested approximately $3.8 million in the facility renovations.
The general manager also responded to accusations that his father receives special privileges by having EMC mechanics work on his personal vehicles.
According to Bo Rosser, this is a benefit that all EMC employees receive and it has been a practice for many years.
“The employee is charged for any parts or materials, but the labor is provided at no cost to the employee,” Rosser said.
“The way the board looks at it is if we have mechanics with no work to do, we let them work on employees’ vehicles to keep their skills sharp,” he added.
Rosser told The Messenger he has also been asked about a number of limited liability corporations and for-profit corporations that have been created over the years and are affiliated with Grady EMC. He acknowledged that his father continues to be listed as the registered agent of these entities, but he said he is in the process of having that position switched to his name, which he said is a time consuming process.
Many of the LLCs are related to Grady EMC’s investment in a gas powered electric plant located near Baconton, Ga. “This has been an unbelievable investment for our members,” Rosser said of the $200 million project.
Questions have also been raised about the purchase of a large tract of land northwest of Cairo on GA Hwy. 112. “The board saw this as an opportunity for a long-term investment. It could be developed for a new gas fired plant or solar or biomass plant. The board also looked at it as a possible storm restoration site where 500 crew members could be staged in the event of a weather related crisis,” Rosser said.
The land was purchased by an EMC related LLC to protect the membership from potential liability, according to the general manager.
Rosser also addressed a lawsuit filed earlier this year against Oglethorpe Power and some other EMCs in Georgia. Although Grady EMC is not a named party in the lawsuit, Rosser admits the EMC is indirectly involved.
The suit is over $2 billion of patronage capital held by Georgia’s 38 EMCs. Rosser says the board of directors voted many years ago to retain capital credits and uses that equity to obtain lower financing rates for operating the EMC.
“If we pay out all of our equity, it would put us in a poor financial situation,” Rosser said.
Rosser said that each member is refunded his/her capital credits account by payment to the member’s estate at the death of the member.
Grady EMC’s new general manager said that he will maintain an open door policy and expressed his willingness to discuss any issues or concerns with any member. He declined to answer all of the questions posed to him by The Messenger and he noted, “I think it is critical to remember that Grady EMC is a private organization and not public and is not subject to the same public scrutiny of other organizations, but rather the scrutiny of its members. Our membership has been pleased as Grady EMC has been a top performer in the state for many years as evidenced by the service we provide and the success of our employees.”
He added that any member dissatisfied with the management of the EMC is welcome to meet with him or the board of directors.