The Cost of Betrayal – Part Deux

By any metric, J. Hyatt Brown, the long-time Chairman of the billion-dollar insurance intermediary Brown & Brown, is a master of manipulating our system of governance to his personal advantage.

While I don’t know Mr. Brown personally, I know many people who do, and he is clearly a brilliant man, an expert tactician, with an aggressive business sense and no qualms about using his massive personal and professional assets to position his interests.

For instance, when J. Hyatt decided he wanted to build his corporate headquarters in Downtrodden Downtown Daytona, he carefully orchestrated an invitation only roll-out that had our “movers & shakers” eating out of his hand with tall tales of all the new Brown & Brown campus will do for us long-suffering denizens of the Halifax area.

In fact, at the time, The Daytona Beach News-Journal reported, “The new Brown & Brown building, coupled with other new development being pursued for the riverfront, could catapult the heart of downtown into a new stratosphere.”

Wow.

Once he set the hook – Mr. Brown began reeling-in massive governmental incentives from his hired chattel on the Dais of Power – taking millions in infrastructure improvements and tax credits from both the City of Daytona Beach and the County of Volusia.

In my view, it was the perfect example of our legally approved quid pro quo campaign finance system in action – where those with the financial wherewithal to influence elections later reap the benefits of “corporate welfare” and skewed public policies which place the whims of the few over the needs of the many.

Recently, we learned that all is not as it seems in J. Hyatt’s kingdom – with allegations of corporate intrigue and betrayal – resulting in massive lawsuits and other punitive measures designed to bring former-executives-turned-competitors to heel.

According to reports, in October, Brown & Brown filed suit against several former executives – including Charlie Lydecker, a former regional president who left the company in 2016, before forming Foundation Risk Partners – alleging a “betrayal of executive loyalty” and conspiracy to create a competing insurance company.

(You can read my goofy take on it here: https://tinyurl.com/ycn7k53l )

I recently introduced myself to Mr. Lydecker when I ran into him at a local craft brewery.  While we didn’t discuss the Brown & Brown case directly – I found him to be a true gentleman – incredibly bright, personally engaging and, as one would expect, very well-versed in local civic issues.

In the few minutes we spent together, I came away with the impression that Mr. Lydecker is committed to building a better community – as evidenced by his service on the ill-fated Beachside Redevelopment Committee – and participation in other civic improvement efforts.

Although I doubt we agree on the mechanics of how best to alter the ugly trajectory of the Halifax area – I find it refreshing that an established business leader like Charlie Lydecker is focused on improving our collective future – not just his company’s bottom line.

At the end of our conversation, I came away with a completely different impression of Mr. Lydecker than the Machiavellian image of him crafted in the Brown & Brown lawsuit.

Now, thanks to the excellent reporting of the News-Journal’s Clayton Park, we’re getting the other side of the story as Mr. Lydecker and others defend their honor and good name with counter-accusations against the industry behemoth.

According to the legal response to Mr. Brown’s allegations, this may well be a case of corporate nepotism – where blood ultimately proves thicker than talent, effort or loyalty.

Apparently, in 2009, J. Hyatt promoted his son, J. Powell, to succeed him as CEO, over “longtime Hyatt loyalist Jim Henderson (Brown & Brown’s then vice chairman) to whom Hyatt had promised the promotion,” according to the legal response.

This flew in the face of J. Hyatt’s long-time leadership strategy which structured the company as a “meritocracy” – where the cream rose to the top based upon hard-work, talent and ability – rather than an employee’s surname.

According to the News-Journal’s report:

“The sudden elevation of the younger Brown to chief executive “created a crisis of confidence in the current and future leadership of (Brown & Brown) that, in one fell swoop, shattered the trust of a workforce who was led to believe in the meritocracy Hyatt had preached,” according to the legal response.”

“Right there, for the (Brown & Brown) world to see, merit and loyalty were discarded for nepotism,” the legal response states.”

“The executive ranks of the company soon became the Brown family employment center, with Brown family children and relations being elevated to the highest positions in the company regardless of the merit,” the legal response adds.”

According to Foundation Risk Partner’s rebuttal, J. Powell Brown brought a “new indecisive and odd leadership style” resulting in “internal strife and doubt” in the company’s sizable workforce.  In addition, there are allegations of “awkward and disconcerting behavior” by J. Powell as the President and CEO, along with a “disingenuous explanation of his sudden and extended leave of absence in 2012” that ultimately resulted in some 52 senior leaders jumping ship.

Damn.

In addition, the court filing alleges that Brown & Brown manipulated commission revenue “to show that the retail division was more profitable than it actually was, to meet the expectation of (stock) analysts” – and when Mr. Lydecker objected to the practice – he was “asked to leave because of his questioning the ethics of Powell’s management.” 

Wow.

I don’t know who is right and who is wrong – that’s for a judge to ultimately decide – but what I do know is that this clash of the titans isn’t good for the Halifax area.

For good or for ill, companies like Brown & Brown – and the successful newcomer, Foundation Risk Partners – form a sizable portion of our economic bedrock here on Florida’s Fun Coast.

With hundreds of people currently employed by Brown & Brown – and the promises of more jobs to come – along with the anticipation of the new headquarters campus and a symbiotic riverside park complex – Brown & Brown’s local expansion in downtown is bringing hope to an area that deeply needs something to look forward to.

The health and vitality of the insurance industry needs new and innovative companies, like Foundation Risk Partners, with the ability to contend on a level playing field, free from threats and intimidation from its much larger competitor.

In my view, perhaps Brown & Brown should stop bludgeoning former executives who have the courage to go forth and create a better product, provide a higher quality of service and bring spirited competition to the ultimate “meritocracy” – the free and open marketplace.

That’s good for everyone – and for the Halifax area.

 

 

 

 

 

 

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