As CEO of Junior Achievement of Central Indiana, Jeffrey Miller wrote a contract for a top executive, and later amended it, but acknowledges he never mentioned either decision to the board of directors.
Junior Achievement’s attorneys paint Miller as something of a renegade to bolster their defense in an ongoing lawsuit by former Executive Vice President Victor George.
George sued the not-for-profit last year after board members and Miller’s successor, CEO Jennifer Burk, accused him of wrongfully liquidating a $25,000 deferred-compensation account. George says he had a right to cash in the account after a vesting date Miller had approved.
“Miller did not seek board approval for decisions related to staff members and did not even communicate his decisions to JACI’s board of directors,” attorney Darren Craig of Frost Brown Todd said in a recent brief seeking summary judgment in JA’s favor. The brief cites an excerpt from Miller’s deposition, taken last summer.
The lack of communication among Junior Achievement’s leaders became apparent after Miller, who retired at the end of 2008, handed the reins to Burk, a past board chairwoman.
Late in 2009, the Central Indiana Community Foundation halted grant funding for a major construction project, a culinary school adjacent to JA’s North Keystone Avenue headquarters. CICF officials said they hadn’t been aware that the culinary school was being handled not by Junior Achievement, but a related entity, of which Miller had been president and continued to work as a consultant.
Communication, or lack thereof, is a key issue in George’s suit. He alleges Junior Achievement violated his employment contract and defamed him by spreading word among the board that he stole the money in his deferred-compensation account.
George liquidated the account in early December 2009, which was in line with the Dec. 1 vesting date Miller set out in a letter before he retired. But Burk and others had reason to believe the account vested on June 30, 2010, so their accusations don’t amount to defamation, Craig argues.
George’s attorney, Kathleen DeLaney, declined to comment on the latest filing in the suit.
What’s important is that Miller had the authority to act on his own, his attorney, Kevin Betz, said.
“Do they ever say that Jeff has a duty to go to the board of directors?” Betz asked. “Last I checked, the CEO is authorized by the board of directors to conduct the business on a day-to-day basis.”
That’s probably true, but the lack of communication at Junior Achievement was exceptional, said consultants who advise not-for-profits on governance issues.
Even when boards don’t require approval for a major decision, CEOs report them after the fact, said Bryan Orander of Fishers-based Charitable Advisors.
Indianapolis consultant Dave Sternberg said most not-for-profit boards are at least aware of major decisions.
“Most of the time what non-profits suffer from is micro-management,” he said.
Junior Achievement, which teaches kids about business and personal finance, is different from most small not-for-profits because its board is packed with executives, and they probably don’t want to get involved in daily details, Orander said.
Miller’s decision to move up the vesting date of George’s deferred compensation plan could have had a multiyear impact on JA’s books, Orander said.
Normally, he said, boards, or at least executive committees, would sign off on a change like that.
“That’s an odd thing to change without talking to somebody else,” he said.
Though he retired, Miller worked closely with Burk in May and June of 2009, according to an excerpt of her deposition. They met at least once a week for several hours, she said. “We were spending a great deal of time together.”
She said Miller did not mention that George had a written contract. According to the deposition, Miller told her he thought George would stay until the end of June 2010 because of the vesting date on his deferred compensation.
Burk, who became permanent CEO in July 2009, didn’t realize that was part of an employment contract until she opened personnel files that month.
Burk and George did not get along.
“Victor’s lack of cooperation leads me to believe that there is no benefit to him staying to year-end, but I continue to seek a positive parting of ways,” she said in an e-mail to a board member.
George said he went to board members Mark Shaffer and Harry Danz with complaints, including that JA failed to remit retirement and health-savings withholdings, a potential violation of the Employment Retirement Security Act.
In late 2009, George and Danz started negotiating a retirement agreement, which would have included a $15,000 bonus.
In a final conversation in January, Danz told George the bonus would be paid from his $25,000 deferred account. That’s when George explained it had already been liquidated.
Danz testified that he quickly ended the phone conversation and relayed the information to Burk.
She placed a call to JA’s investment broker, Wells Fargo, and double-checked JA’s files.
Burk said she never found information about a Dec. 1 vesting date, and she didn’t see a copy of the amendment letter Miller had written until George’s attorney provided it.
Miller confirmed in his deposition that he wrote the letter. He said he handed a copy to George and put the other copy in George’s personnel file.
Although the file was kept in the chief operations officer’s office, Miller explained the COO was not present on Dec. 1, 2008, when he filed the amendment letter. Miller said he didn’t mention the amendment to the COO or to board members.
Miller also testified that he didn’t save a copy of the letter to his hard drive, and he didn’t have anyone witness his signature.•