Audit: Hartford trash agency overpaid fired executives
A defunct Hartford trash-to-energy plant improperly paid four executives over $1 million in severance and health insurance benefits as they left the failing company last year, state auditors said.
The state-created Materials Innovation and Recycling Authority, which operated an energy plant in Hartford along with various transfer stations, paid the exiting executives $1,044,980 in lump sum severance and COBRA health insurance payments, the audit said.
“The authority’s employment agreements allowed for severance payments that exceeded policies in its employee handbook,” auditors said in a review of the payments issued last year.
“It appears MIRA did not take into consideration established policies when developing the terms of these agreements,” auditors continued. “This clearly exceeded the 16-week maximum in the employee handbook. MIRA cited its statutory authority and employee handbook language which permits it to deviate from its policy. However, the authority was unable to provide written justification for this deviation.”
MIRA, which has been replaced with the MIRA Dissolution Authority, disagreed with the auditors’ findings.
“We respectfully do not agree with this finding,” the new authority said. “Certain key facts and contextual circumstances might not have been fully appreciated in [auditors] review.”
The agency noted the severance payments were necessary considering the “dire circumstances MIRA faced” and insisted the agency had authority to issue the payouts.
The MIRA Dissolution Authority was created by the state in July 2023 to assume the previous authority’s statutory requirements, which includes operating its remaining waste transfer operations and guiding future redevelopment of the now closed energy plant along the Connecticut River in Hartford’s South Meadows region.
In March of last year, a CT Insider column by Dan Haar exclusively reported the $1 million payments to the executives, noting three of the those executives were already “on their way out of the fading agency.” A fourth executive, Mark Daley, the former MIRA chief financial officer, became the CEO on that payday, Jan. 6 and also received a full severance pay out, the report noted.
When reached by phone Thursday, Daley declined comment beyond the agency’s response included with the audit.
The four executives, including Thomas Kirk, the former CEO whose last day was Jan. 6, were approved for payments, which included included a year’s pay; up to 80 weeks of accrued vacation time; cash for extended COBRA health insurance whether they needed it or not; and other benefits, Haar reported.
The executive’s base salaries ranged from $187,567 for Laurie Hunt, the general counsel, to $335,320 for Kirk, public records showed.
“The payments did not reward great results,” Haar wrote. “Rather, they were designed to make sure the executives didn’t exit for other jobs as the agency wound down its main activities of recycling and trashburning.”
Closing down
State auditors explained that in July 2022, MIRA closed its Hartford energy plant and terminated employment agreements with four top executives, effective January 6, 2023.
MIRA was created in 2014 by the state Legislature after a management and financial crisis at its predecessor agency, the Connecticut Resource Recovery Authority. The new agency was tasked with operating the Hartford trash-to-energy plant and transfer stations that accepted garbage destined for the facility.
But events and outdated technology doomed the effort. The jet turbines used to create power at the Hartford plant were built in the 1940s, which led to frequent breakdowns and other problems. The trash the plant expected to use for fuel was increasingly shipped out of state, in part due to poor recycling separation by residents, obsolete equipment and disputes between MIRA and its recycling operator.
In criticizing the payments to executives, state auditors focused on the MIRA’s employee handbook, which outlined what happened when employees were terminated. According to the handbook, employees are entitled to a separation payment equal to two weeks of pay per year of service, with a minimum of ten weeks and maximum of sixteen weeks of separation pay, auditors noted.
“The handbook includes a disclaimer that allows the authority to vary from its policies and procedures,” auditors said. “However, sound business practice dictates that an organization should make reasonable efforts to conform with its policies and document any reasons for significant deviations.”
Auditors said MIRA paid the employees a year of severance pay at the employee’s annual salary rate from the date of termination and COBRA
reimbursement for the employees and their eligible dependents, noting “This clearly exceeded the 16-week maximum in the employee handbook.”
MIRA stands by decision
In response, the MIRA Dissolution Authority said “certain key facts and contextual circumstances” were not considered by state auditors.
“The MIRA Board did approve severance agreements that varied from the handbook,” the agency said. “MIRA’s employment counsel provided [auditors] with significant documentation of its legal authority to enter into the agreements which [auditors] acknowledged as correct when stating that The Employee Handbook includes a disclaimer allowing MIRA to vary from the policies and procedures.”
MIRA said its counsel also noted: “The executive employment agreements recognized the exemplary contributions of the executives and secured the retention of these highly qualified executives.”