Airport shrugs off CEO probe over travel allegations

April 10, 2010

The board of the Indianapolis Airport Authority had heard the allegations that John Clark, their star candidate for airport CEO, racked up big expenses on world travel while chief of the Jacksonville Aviation Authority.

The employment pact they subsequently struck with him doesn’t explicitly limit his expenses as CEO of Indianapolis’ airport system, however.

clark mug Clark

If it wasn’t a concern then, it could be now. Florida State Attorney Angela Corey confirmed this month that her office is collecting Clark’s records in Florida and information from Indianapolis concerning trips he made here for job interviews.

“We investigated the travel allegations brought up by the local media before we hired John and found them to be untrue,” said Michael Stayton, president of the Indianapolis Airport Authority board.

“We expect John to travel on behalf of the IAA as his job requires and abide by the established travel rules in place for all IAA employees.”

A copy of Clark’s employment terms with IAA makes no mention of expense parameters, other than paying for his relocation from Florida last March.

There was no reason to include any extraordinary provisions regarding expenses, said the authority’s former board president, Randall Tobias.

The authority had a “well established and very appropriate system of financial controls in place,” including an approval process for employee expenses, Tobias said.

“I think if we had felt there was a need for some further special process because of concerns about a particular candidate, the solution would not have been to install a special process. It would more likely have been not to hire that candidate in the first place,” Tobias added.

“Based on a very thorough due diligence process, we had no reason for any such concerns.”

Often, employment agreements don’t specify expense parameters beyond what’s “usual and necessary,” said Kim Ebert, an employment attorney at Ogletree Deakins’ Indianapolis office.

One reason is, it’s hard to anticipate what an executive’s travel needs will be years down the road.

Clark replaced former airport CEO John Kish last March. Kish, who left to lead a municipal stadium construction project in Evansville, earned $231,750 a year. Kish also had the dual role of director of the midfield terminal project.

His successor earns annual base pay of $270,000. Clark didn’t earn that much here last year because he didn’t start until March, but he received about $33,000 in incentive payments in addition to his regular pay.

In the future, Clark has the potential to earn 30 percent on top of his base salary—$81,000 per year—if he meets the terms of a management incentive program “which will be subject to board approval,” for a total potential pay of $351,000.

The incentives will be based on his ability to reduce airport costs and drive up revenue at a time when airport passenger and cargo traffic have slumped.

Clark’s success is vital to the authority, which is negotiating new rates and charges with the airlines serving Indianapolis International. Those negotiations would likely be more successful if the airport can demonstrate it is supplementing its income with new “non-aviation” revenue.

Clark’s specialty has been improving airport financial performance, both here and in Jacksonville. But his push to reduce costs in Jacksonville, including employee downsizing, alienated groups from airport carpenters to airport police. That city’s alternative newspaper, Folio Weekly, in 2008 contrasted those expense cuts with Clark’s own pay and travel perks and, as proposed in Indianapolis, a 30-percent bonus potential for meeting financial targets.

The paper reported that Clark, with a salary in Jacksonville of about $241,000, traveled frequently to cities from Brussels to Shanghai, including $800-a-night hotel stays.

At the same time, Clark was also chairman of Airports Council International, the largest worldwide organization representing airports.

The reports of Clark’s spending intensified just before Indianapolis board members were to unveil their new hire. Clark had been vetted by a major aviation head-hunting firm, but the media reports forced airport officials to conduct additional interviews of executives who’d known Clark for years, along with top Jacksonville business and civic leaders. Those leaders were incredulous about the reports of improper spending.

“Everybody said, ‘That’s ridiculous; he’s outstanding,’” said a key person involved in the hiring who asked not to be identified. “These were very prominent people in the Jacksonville community. They said, ‘You’ve got to be kidding.’”

Indianapolis airport officials also looked into allegations of $800 hotel rooms. The source said he obtained a copy of one of the bills Clark incurred for lodging in South America. The bill was for $800, but in local currency and not in U.S. dollars, he said. In reality, “it was about the same cost of the airport Holiday Inn or something.”

The airport source said the Florida probe “appears to be a witch hunt. … The only thing I can conclude is, someone is trying to do a hatchet job on John Clark.”

Clark had drawn the particular ire of Jacksonville’s powerful Fraternal Order of Police union.

Early last year, the president of the airport police officer’s union alleged that Jacksonville airport administrators were playing hardball during contract negotiations and that Clark allegedly threatened to eliminate department positions.

“This has nothing to do with retaliation and everything to do with carrying out my business plan,” Clark told Jacksonville’s Times-Union.

The FOP in Jacksonville was a major and outspoken backer in Corey’s campaign for state attorney.

Corey “has been their political puppet for some time,” her opponent for the job, Jay Plotkin, told First Coast News in 2008.

Corey is seeking records, including Clark’s time sheets and leave records. Indianapolis airport officials have sent her the names of people he met with for job interviews here last year and the dates of those meetings.

Clark issued a statement earlier this month saying he wasn’t sure why he was being investigated; he defended his 14-year tenure in Jacksonville.

“I have not, nor will I ever, engage in unethical or illegal business practices,” he said.

If the current tempest grows, and Clark is deemed a liability to the authority, it can terminate him but must pay 12 months’ base salary, or $270,000, according to his employment pact.

If a CEO is indicted or found guilty of a crime, “that’s a little more complicated,” said Kenneth Dau Schmidt, professor of labor and employment law at Indiana University.

“You could argue it undermines your ability to do your job,” he said.

Trust is a paramount requirement for a person in a fiduciary position.

But one person closely involved in Clark’s hiring remains confident: “I can tell you everyone continues to be very, very positive about John.”•


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