AADAO Oversight Special Report: GM Misconduct/Mismanagement

[Cosmos_Nanny]

September 10, 2024

AADAO Oversight Committee Special Report:

Notification Regarding Proposed Bonus Methodology, Alleged Misconduct and/or Mismanagement Involving the General Manager (GM), and Governance Concerns

Table of Contents

I. Executive Summary
II. Background
III. Oversight Decision to Withhold Approval for Proposed Bonus Methodology
IV. Withholding Reasoning
V. 2024 Team Compensation: Salary Base + Retention Bonuses
VI. What Did Cosmos Hub Governance Approve?
VII. Alleged Misconduct and/or Mismanagement Involving the GM
VIII. GM’s Interference with Oversight
IV. GM’s Proposal
X. Conclusion

I. Executive Summary

This communication serves two vital purposes:

1. To formally notify the Cosmos Hub community of significant concerns regarding AADAO’s proposed bonus methodology and framework.
2. To alert the community to recent events that have substantially compromised the Oversight Committee’s ability to:
   a) Perform its duties effectively within AADAO’s established governance structure
   b) Exercise reasonable checks and balances
   c) Review and investigate alleged misconduct and/or mismanagement involving the General Manager (GM), Youssef Amrani.

These developments have precipitated serious concerns about:

• AADAO’s governance practices
• Financial management and decision-making protocols
• The overall integrity of its executive operations

II. Background

Proposal 865 (AADAO’s renewal mandate), included a provision for the allocation of 100,000 ATOM to be used for a performance and retention-based bonus program. Notably, this proposal passed without clearly defined methodology, Key Performance Indicators (KPIs), and/or assessment frameworks (hereinafter “methodology”) governing the distribution of said bonus ATOM tokens.

The full text of Proposal 865, including supplementary comments, was made available via an IPFS pin. The pertinent section of the full text states verbatim:

“AADAO plans to distribute up to 100,000 ATOMs across its team as part of an ATOM Alignment Allocation. This allocation plan is multi-dimensional, focusing on performance and retention of key talent and is described here. The bonuses are neither automatic nor guaranteed, and are subject to review of the Strategy Committee and Oversight.”

“AADAO Performance and Retention Bonus Protocol.”

The above document was NOT incorporated as a direct link within the on-chain version of the proposal text; its accessibility was limited to a hyperlink within the IPFS pin and the Cosmos Hub Forum post for Proposal 865.

The protocol document delineates the distribution of the bonus pool as follows:

The 100,000 bonus ATOM is allocated with a 90% cap:

• Performance Bonuses: up to 70% of the total ATOM bonus pool (70,000 ATOM).
• Retention Bonuses: up to 20% of the total ATOM bonus pool (20,000 ATOM, with distribution commencing February 2024).
• Strategic Bonuses (team-base performance bonus for Strategy Committee members): 10% of the total ATOM bonus pool (10,000 ATOM)

The document further outlines the grading methodology for performance-based bonuses as follows:

• "Below Expectations" (0% of maximum allocation): The team or contributor fails to meet their commitments and KPIs. Ineligible for performance bonus.
• "Meets Expectations" (50% of maximum allocation): The team or contributor fulfills their commitments and meets KPIs. Eligible for middle tier performance bonus.
• "Above Expectations" (100% of maximum allocation): The team or contributor exceeds their commitments and surpasses KPIs. Eligible for up to the allocated maximum bonus.

While the proposed methodology broadly adheres to the rudimentary plan described in the referenced document, Oversight contends the lack of visibility and attention given to this document means it cannot be assumed to be “ratified” scope as per 865. In fact, several validators who voted Yes to 865, do not recall ever seeing the Bonus Protocol document.

Subsequent to the ratification of 865, there have been material delays in the formalization of the methodology to be used for the distribution of bonus ATOM to individual contributors and subDAO teams.

The GM assumed primary responsibility for the research and development of said methodology. The Strategy Committee, comprising of Mark D, “Better Future”/Ryan Orr, and Carter Woetzel, approved the methodology before it was conveyed to Oversight for final approval and implementation.

Currently, the Oversight Committee consists of the Financial Controller/Accountant (Patricia Mizuki) and the Elected Member (Grace Yu). The Oversight Coordinator position is currently vacant due to Damien Bonello’s departure in May, and in the interim, Grace has assumed several of the Coordinator’s responsibilities.

The Oversight Committee’s mandate in the bonus process is twofold:

• Approve the proposed bonus methodology and related KPIs (individual, team)
• Ensure transparent communication of both the methodology and germane information to the Cosmos Hub community

III. Decision to Withhold Approval for Proposed Bonus Methodology

After thorough review and deliberation, Oversight decided to withhold approval for the proposed bonus methodology. The Oversight members communicated this decision to the core DAO contributors on August 29th.

Had this methodology been sanctioned by Oversight, it would have initiated the vesting of ATOM from the bonus pool for individual performance-based bonuses commencing September 1, 2024.

IV. Withholding Reasoning

The primary rationale for withholding arises from what we deem to be an inappropriate application and utilization of the bonus program to establish what we perceive as variable compensation mechanisms influencing total potential compensation.

It is the position of the Oversight Committee that bonus ATOM should be exclusively reserved for performance that “exceeds expectations” or is deemed exceptional.

Furthermore, we maintain that the manner in which AADAO communicated its intended use of bonus ATOM during the pre-proposal phase and voting period of Proposal 865 strongly implied that the bonus pool would be utilized to incentivize measurable excellence.

The GM contends that the proposed utilization of ATOM bonuses for performance that “meets expectations” was ratified by governance because the Bonus Performance and Retention Protocol was shared. He also argued that rewarding performance meeting baseline expectations aligns with “industry standards”, we respectfully dispute this interpretation. There’s considerable variation as to how bonuses are used within a given industry depending on stage of business, and nature of the job being done.

We also find it problematic that select contributors of the DAO, particularly the GM, did not want to disclose the individual performance-based KPIs to the community for validation before proceeding with implementation.

Oversight asserts that the bonus pool should not be misused to “reward” unexceptional performance that merely “meets expectations”. Additionally, given the current price action of ATOM, the proposed methodology is all the more indefensible.

To illustrate our misgivings with the proposed methodology, consider the following example of KPIs used for "meets expectations"under which a contributor would be eligible to receive 50% of their performance-based ATOM allocation (with Youssef Amrani, GM, serving as the direct report):

Oversight also disapproves of AADAO’s recruiting practice of guaranteeing the disbursement of bonus ATOM for “average performance” in inducing potential contributors to accept relatively under-market base salaries.

(Sarah Braxenhall and Erin Vanderberg were prospective leads for the Marketing and BD SubDAOs)

Additional reasons for withholding approval:

• Disproportionate favoring of senior roles within the proposed bonus methodology –with the applied methodology lacking parity, equitability and consistency.
• Potential perpetuation of compensation disparities existing between the GM and the rest of the contributor team.
• Ineffective incentivization scheme for contributor excellence; bonus ATOM is utilized for performance that “meets expectations” rather than “exceeds expectations”.
• Individual KPIs lack objectivity and “SMART” attributes: specific, measurable, actionable/achievable, relevant, time-bound.
• COIs in assigning the GM’s bonus assessment to StratComm members (vulnerable to quid pro quo)

V. 2024 Team Compensation: Salary Base + Retention Bonuses

The distribution formula for various bonus categories—including retention bonuses, performance-based bonuses (both individual and team), and performance-based bonuses specifically for Strategy Committee members—all employ 2024 base salaries as the foundational metric for determining maximum ATOM allocation amounts.

Such an approach may inadvertently amplify pre-existing compensation inequities within the organization’s remuneration structure.

This issue is particularly problematic given that many contributors, especially recent hires, have accepted sub-market base salaries and are not recipients of “retention bonuses”.

In the interest of transparency, we deem it necessary to show you how AADAO “compensation brackets” translate into base annual salaries, and to disclose what eligible contributors have been receiving since February 2024 in the form of monthly “retention bonuses”, affecting total monthly comp.

As noted earlier, please remember that the retention bonus utilize 20% of the 100,000 ATOM bonus pool and allocated using a pro rata rate of 2024 base salaries.

It is important to highlight that the performance bonuses (team, individual, strategy) have not yet been distributed. This delay is due to objections raised by Oversight regarding the potential for these bonuses to further exacerbate compensation disparities if implemented as proposed.

Please note, the Financial Controller has determined that utilizing the daily average ATOM price from Jan 1 - Aug 24, 2024, represents the most appropriate and accurate method for estimating the USD value of the ATOM retention bonus. $8.66 US is the daily ATOM average for the referenced time period.

The primary calculation of ATOM value of $8.66 USD has been used for all relevant computations within this spreadsheet: AADAO Historic Team Compensation & Bonus Distribution (prepared by AADAO Oversight).

AADAO Published Compensation Brackets: (per Proposal 865)

• Program Manager and Strategy Committee Members: $75 - $95 per hour
• Technical/Developer Member: $45 - $65 per hour
• Reviewer Committee Member: $35 - $55 per hour
• Administrative Member: $15 - $20 per hour

In view of the above concerns, Oversight has recommended a comprehensive review of the proposed methodology to effect a policy that reflects greater parity with improved KPIs and incentives across the organization.

We have also instructed the DAO to communicate its use of the ATOM bonus pool with clear and precise terminology that accurately describes how the ATOM is being used. If it’s not being used as a “bonus” consistent with community’s association of bonuses with exceptional performance, it should not be described as a bonus methodology.

While it can be argued that compensation structures and agreements fall outside the purview of Oversight, we contend that our involvement is warranted and necessary in this case. Compensation structures and bonus schemas are fundamentally a resource utilization question. If ATOM is being used inconsistently or inequitably, it is within our core responsibilities and public obligation to question why contributor salaries remain relatively non-competitive while the GM’s salary is maintained at “market-competitive” levels.

We believe how salary bands interact with bonus mechanics fall within the scope of oversight review, especially if it yields outcomes that lack a fair distribution of ATOM incentives.

VI. What Did Cosmos Hub Governance Approve?

AADAO’s GM contends that his approach to using the ATOM bonus pool was “ratified” by the “sovereign voice” of Cosmos Hub governance through the passage of Proposal 865. Oversight believes he is conflating the Governance provision of 100,000 ATOM with the methodology used to distribute it. These are not the same things. Especially given that a meaningful methodology and its relevant KPIs were not shared with stakeholders during the voting period.

The GM’s insistence that the use of bonuses for “meets expectations” raises material questions regarding the scope of voter approval.

Given these divergent perspectives, the Oversight Committee urgently seeks clarity from the community regarding your understanding of what was ratified with respect to AADAO bonuses in Proposal 865.

Specifically:

1. Did you interpret a “YES” vote on Proposal 865 as constituting approval of all policies within the linked documents, e.g., the “AADAO Performance and Retention Bonus Protocol”?

2. In your opinion, does the passage of a proposal implicitly ratify all linked documents and their contents, or should such ratifications be more explicit? Furthermore, how is the sufficiency of document linkage determined, and where should such links be presented?

3. Was it explicitly clear that the 100,000 ATOM bonus allocation for “Performance and Retention” could be utilized as compensation tools supplementing monthly salaries?

4. Is it appropriate to use the bonus pool for contributor performance that “meets expectations” or must it be used for performance that “exceeds expectations”, only or more?

Your insights on these matters are essential. We ask for your opinions on the above, in this Forum by Monday, September 23rd.

VII. Alleged Misconduct and/or Mismanagement Involving the GM, Youssef Amrani

On August 30, 2024, six out of nine contributors convened for the weekly scheduled Strategy Committee call. The exclusive objective of this call was to have the GM’s rationale for the proposed bonus methodology, and to ascertain the extent of Strategy Committee members’ awareness regarding the bonus methodology’s impact on the total compensation of all contributors.

During this meeting, the GM was asked to provide justification for the competitive nature of his base salary in contrast to the sub-market compensation of other contributors, and to explain the apparent disproportionate allocation of bonuses in his favor.

In the course of this call, the GM alleged that the Financial Controller had been withholding approval of the proposed methodology due to the GM’s refusal to accede to her purported request for performance-based bonuses. The GM further alleged that the Controller’s withholding of approval was retaliatory in nature and that she was “lacking integrity.”

In response to these allegations, the Controller provided a rebuttal, asserting that the GM’s claim regarding her request for performance-based bonuses is a misrepresentation of their prior discussions.

The Controller explained that she had, in fact, argued that the lack of objectivity in the GM’s proposed KPIs would theoretically qualify Oversight members to receive performance-based bonuses, a point she had raised to illustrate the perceived inefficacy of the GM’s suggested KPIs. The Controller affirmed that she had previously explained to the GM that Oversight’s function, not directly accruing value to ATOM, should preclude it from eligibility for performance-based ATOM bonuses.

The Controller further explained the origin of her professional disagreements with the GM, tracing them to February 2024. At that time, the GM had shared a document, expressly designated as “confidential,” exclusively with the Controller. This document revealed the effect of retention bonuses on monthly compensation rates.

Upon receipt and review of this document, the Controller averred that she perceived the GM’s total possible compensation as being worrisome. In accordance with her fiduciary duties, she subsequently consulted the then-Oversight Coordinator regarding her concerns. Following deliberations, both Oversight members concurred that the GM’s salary appeared to be excessive and potentially “abusive.”

In light of these concerns, the Oversight members agreed that it would be prudent to raise questions regarding the retention methodology proposed by the GM. Specifically, they questioned the GM’s insistence on utilizing 2024 base salaries for the retention formula, asserting that this approach compounded what they perceived as a double dip benefit for the GM.

In comparison to the 2023 base salary structure, all returning contributors had accepted reduced base salaries, with a mere two out of seven receiving a nominal 5% raise in base salary. In stark contrast, the GM gave himself a 36% raise to his own base salary. Because the GM’s retention-based formula utilizes 2024 salaries, as opposed to 2023 salaries, this results in yielding an 86% increase (assuming an ATOM average value of $8.66) for the GM’s 2024 total monthly compensation, when compared to his monthly remuneration during the 2023 pilot year.

Furthermore, this retention formula makes the GM the beneficiary of 50% of all available retention-based ATOM. The obvious gaps in compensation and proposed bonus allocation illustrates the obvious conflicts of interest involved when the GM has singular discretion in negotiating compensation, and designing the bonus structures.

The Controller attested that she had conducted research and consulted with professionals regarding standard practices for retention formula calculations, subsequently communicating to the GM that the normative practice is to reference 2023 base salaries rather than 2024 base salaries. The Controller reported that the GM responded with hostility to this suggestion. Furthermore, the Controller alleged that subsequent to her conversation with the GM on this matter, she received a phone call from the GM’s spouse, which she described as aggressive, verbally abusive, and intimidating in nature.

Despite the recommendations from the Controller and the former Oversight Coordinator to utilize 2023 base salaries for the retention bonus calculation, the GM unilaterally implemented the use of his preferred formula.

The Controller reported that subsequent to these challenges, she experienced additional confrontations with the GM as he developed and proposed the “final KPIs” for individual performance-based bonuses. The Controller consistently argued that these KPIs lacked objectivity and specificity.

The Controller alleged that the GM frequently resorted to a pattern of diminishment, with her “integrity” being impugned whenever she exercised or expressed reasonable criticism against the GM’s various ideas. She reported being routinely accused of “over-reaching” and alleged that she had been threatened with removal if she did not acquiesce to and comply with the GM’s directives.

Areas of Potential Misconduct and Mismanagement:

These points outline the material issues of potential violations in behavior and business practices, if the Financial Controller’s provided testimony is true.

A. Abuse of Compensation Structures:

• Excessive and potentially “abusive” compensation practices
• Lack of transparency and disclosure regarding total monthly compensation
• Excessive 86% increase in the GM’s base salary from the previous fiscal year
• Improper utilization of retention bonuses to inflate monthly compensation
• Absence of proper oversight and controls on determinations of total compensation and bonus schemes

B. Interference with Oversight Functions:

• Alleged obstruction of oversight duties
• Potential intimidation and coercion of oversight committee members
• Undue influence on oversight processes and decision-making
• Manipulation of oversight personnel to suppress inquiries and concerns

C. Inappropriate External Interference:

• Unauthorized involvement of non-DAO personnel in internal financial, accounting, and governance matters
• Improper influence exerted by external individuals on internal DAO operations
• Violation of professional boundaries and disregard for COIs and internal controls

D. Creation of a Hostile Work Environment:

• Alleged verbal abuse and intimidation of oversight personnel
• Retaliatory threats against Oversight members performing diligence
• Suppression of legitimate inquiries through aggressive verbal threats and retaliatory behavior

E. Fiduciary Duty and Lack of Transparency:

• Willful withholding of pertinent financial information from oversight and other core DAO members
• Resistance to legitimate inquiries regarding compensation, retention, and bonus related methodologies
• Directing obfuscation of financial data to evade scrutiny (Controller was directed to disburse performance-based ATOM bonus monthly to deter attention from the community)

F. Subversion of Oversight Mechanisms:

• Potential rendering of oversight functions as merely perfunctory
• Manipulation and compromise of established oversight processes
• Breach of fair governance principles and internal control mechanisms

G. Conflicts of Interest:

• Singular and unchecked discretion and control in defining and distributing bonus allocations affecting himself and other contributors
• Lack of sufficient checks and balances in compensation related decision-making processes
• Potential self-dealing in the determination of one’s own compensation and bonus benefits
• Unauthorized and inappropriate involvement of spouse in DAO financial matters, creating a conflict between personal and organizational interests
• Alleged use of retention bonuses to disproportionately benefit self, potentially at the expense of other contributors’ possible total compensation
• Alleged pressure on oversight members to approve financial methodologies that disproportionately benefit self
• Potential misuse of DAO resources and/or role for personal benefit
• Alleged creation of a governance structure that centralizes power and decision-making authority; potentially compromising organizational checks and balances

VIII. GM’s Interference with Oversight’s Function

In light of the serious allegations involving both the GM and the Financial Controller, the Elected Member, in the aftermath of the August 30th call, prepared an Incident Report to memorialize the allegations and concerns expressed.

The report explicitly stated its purpose as serving as a formal record of the concerns raised and to notify the contributor team of the initiation of a review process. The report emphasized that no definitive conclusions had been drawn, pending further review and corroboration of the concerns and allegations.

On September 2nd, the Elected Member shared a structural framework for the review/investigation process. This action was explained as the Oversight Committee’s fiduciary duty to ensure proper governance and to address the serious allegations of misconduct and potential breaches of organizational policies.

On September 2nd, the Elected Member shared structure and process regarding her initiated review into the allegations of misconduct and/or mismanagement with all core contributors, transparently.

On a September 4th call with Strategy Committee members, she explained that the purpose of the review was for internal purposes, intended to inform corrective and remedial actions addressing any validated issues of misconduct or governance and or operational deficiencies. At the conclusion of this call, it is true to say all the Strategy Committee members and core contributors to the DAO had acknowledged acceptance of, and agreement with the Elected Member’s process. There are no existing protocols that establish how reviews and or investigations of misconduct are to be executed – therefore, the Elected Member is developing a process where one does not exist.

The review had been proceeding with team-wide agreement.

On September 5th, the GM shared a “Communique” addressed to the Elected Member ordering her to “cease and desist” her review.

Since August 30th, the GM has been actively avoidant, and it has not been possible for the Elected Member to schedule an interview to ascertain his account of events relating to concerns of his misconduct. Prior to the GM’s demand for the Elected Member to suspend the the review, preliminary findings from the investigation indicate:

• The material issues described in an internal Incident Report shared with core DAO members on August 30th, appear to be substantiated in meaningful part, if not in full.

• This assessment is based on:

1. Interviews conducted with relevant parties (names will be withheld for confidentiality concerns)
2. Review of pertinent documentation
3. Examination of communication records related to the alleged misconduct/mismanagement

Oversight views the GM’s “cease and desist” demand to be unreasonable and demonstrative of the alleged intimidation and bullying behavior the Financial Controller has endured throughout the current fiscal year.

IX. The GM’s Proposal

The GM has levied allegations against the Elected Member, asserting that she has committed a breach of confidentiality and violated professional ethical practices by sharing the Incident Report with core contributors. Furthermore, the GM contends that the Elected Member is incapacitated from conducting the review due to what he alleges to be her “bias” and/or partiality, thereby compromising her ability to maintain objectivity in the investigative process.

In light of these allegations, the GM has proposed the engagement of an independent investigator or an ombudsman-like figure to adjudicate the issues pertaining to his alleged misconduct and mismanagement.

The financial implications of the GM’s proposal are both substantial and ambiguous. It is noteworthy that the engagement of an ombudsman is not a trivial undertaking from a cost perspective. In a communication via the Slack platform, the GM indicated that he is “happy to contribute” with reference to his proposal; however, the extent and nature of this purported contribution remain unclear.

The Elected Member has, on multiple occasions, sought clarification from the GM as to whether his contribution is economic in nature. To date, these inquiries have gone unanswered.

Potential Use of DAO Resources

If the GM’s proposed external investigation necessitates the utilization of DAO resources, it is the unequivocal position of the Oversight Committee that the community must be apprised of this potential resource allocation.

In principle, Oversight is not inherently opposed to the engagement of an ombudsman. However, the GM’s proposal to retain an external investigator or ombudsman engenders several substantive concerns:

• The financial implications of such an engagement are both substantial and lacking in clarity. While the GM has expressed that he is “happy to contribute,” the extent and nature of this putative contribution are unknown.

• Should this proposal involve the use of DAO resources, it would constitute a significant expenditure outside the purview of funded key activities, potentially contravening the understanding of how DAO resources are to be used as per Proposal 865.

• GM’s proposal presents a clear and material conflict of interest. It appears to be an attempt to utilize DAO resources to circumvent or undermine the proximate and established oversight mechanisms. It is imperative to note that the Oversight Committee is constituted with the express mandate to perform checks and balances within the organizational structure.

• The proposal bears the hallmarks of an obstruction tactic, potentially representing an injudicious use of public resources for a measure that serves the GM’s personal interests rather than those of the AADAO team or the broader community.

These concerns collectively underscore the need for careful consideration and community consultation before any action is taken on the GM’s proposal.

X. Conclusion

While Patricia and I acknowledge that the issues delineated herein may elicit strong emotional responses, we earnestly urge the community to exercise restraint in forming premature judgments.

The Oversight Committee wishes to emphasize, that the conduct of the General Manager should not be construed as reflective of other core contributors’ integrity or performance.

It aggrieves us to make this report - mainly because unlike the GM, Youssef Amrani, we are not naive to the undesirable and undeserved negative effects his actions can have for the AADAO collective. It is our observation that many core contributors are diligent, impassioned, and upright persons who duly understand and embrace their organizational identity as a Cosmos Hub community owned DAO.

Several of the contributors explicitly communicated to Oversight, they do not believe a bonus methodology is tenable or defensible given the current ATOM climate. It is fair to say, the methodology was persistently pushed, and had escalated to this level of team-wide consideration because the GM desires to see it implemented with urgency.

Therefore, we deem it necessary to caution against precipitous or premature calls for the dissolution or termination of AADAO, as such actions would be unwarranted at this juncture.

Instead, we respectfully submit that the community’s discourse should, at present, be circumscribed to addressing the specific inquiries posed in Section V of this report.

Additionally, we solicit the community’s considered opinion on the propriety of the GM’s proposal to engage an external investigator/ombudsman, and whether the community sanctions such an expenditure.

The Oversight Committee reaffirms its unwavering commitment to ensuring transparency, accountability, and the proper utilization of Hub community resources. We express our profound appreciation for your ongoing engagement and solicit your necessary support in understanding and addressing these critical governance matters.

Respectfully submitted,

Grace
Elected Member, AADAO Oversight Committee

Patricia @Patricia
Financial Controller, AADAO Oversight Committee

References

AADAO Compensation & Bonuses:

• Proposal 865, Mintscan
• Proposal 865, Cosmos Hub Forum
• AADAO Next Steps, Cosmos Hub Forum
• IPFS Pin – Full Text with Comments (Proposal 865)
• AADAO Performance Bonus Structure (this document was not linked in the text of Proposal 865, rather it was linked to the IPFS pin and shared on Forum)
• Transparency Report 7 (please see “Performance Bonus”)
• AADAO Historic Compensation (2023 & 2024) and Bonus Distribution

[Cosmos_Nanny]

Tl;dr:

The Oversight Committee is withholding approval for AADAO’s proposed bonus methodology.

Key concerns:

• Inappropriate use of bonuses as variable compensation tool
• Disproportionate favoring of senior roles, especially the GM
• Lack of clear and objective KPIs
• Misrepresentation of bonus ATOM as incentives to be used to reward exceptional performance
• Misuse of bonus ATOM to remit tokens for performance that “meets expectation” (e.g., checks Slack, attends meetings etc) rather than “exceeds expectations”.

In the course of evaluating the proposed bonus methodology and related frameworks, alleged misconduct/mismanagement by the GM (Youssef Amrani) came to light via testament from the Financial Controller:

• Excessive self-compensation (86% increase in monthly compensation from 2023; assuming an ATOM price of $8.66, his possible total comp including base, performance-based bonuses, and retention bonus is $356,458; his current monthly comp including base and monthly retention bonus brings his total current comp to $239,256)
• Intimidation and inappropriate behavior towards the Financial Controller
• Involvement of his spouse in DAO internal matters and policy-making
• Allowing external members to the DAO, such as spouse to exert pressure on Financial Controller to approve mechanisms she disagrees with
• Interfering with Oversight functions
• The GM has ordered a “cease and desist” of the Oversight review of his conduct – he wants to investigate Oversight for investigating him

The Oversight Committee seeks community input on:

• What was actually approved in Proposal 865
• Whether the bonus pool should be used for unexceptional performance
• The appropriateness of the GM’s proposal in proposing/engaging a provider to execute an investigation on the investigation

AADAO Oversight urges the community to consider these issues carefully while avoiding premature calls for AADAO’s dissolution.

[StunZeed]

I think there’s a simple solution.

The report speaks for itself. @Youssef must be removed immediately.
I generally believe in AADAO (because of people like Joni or Syed, or Grace), so either Youssef quits himself or a proposal votes him out.

He’s unsustainable.

(Ofc I am pretty curious how Youssef answers some obvious questions!)

[Zdeadex]

Im happy that Grace got elected

We will never be able to say anything against her devotion and work

On the other side it feels like even in AADAO there is an alignment of a change needed

[luisqa]

Focusing on the bonus methodology, agree it should be reworked. A bonus is specifically something given for exceeding expectations. If there is a need to re-evaluate base pay that is something that should definitely be addressed, however a bonus is BY DEFINITION something given as an extra and should not take into account the baseline of expected work. Appreciate the report and glad to see we all made the right decision with Grace.

[Cosmos_Nanny]

Please don’t forget to provide comment RE these issues, @Patricia and I would be grateful for what y’all were thinking or were aware of when you voted Y/N/NWV/Abstain on Proposal 865:

1. Did you interpret a “YES” vote on Proposal 865 as constituting approval of all policies within the linked documents, e.g., the “AADAO Performance and Retention Bonus Protocol”?
2. In your opinion, does the passage of a proposal implicitly ratify all linked documents and their contents, or should such ratifications be more explicit? Furthermore, how is the sufficiency of document linkage determined, and where should such links be presented?
3. Was it explicitly clear that the 100,000 ATOM bonus allocation for “Performance and Retention” could be utilized as compensation tools supplementing monthly salaries?
4. Is it appropriate to use the bonus pool for contributor performance that “meets expectations” or must it be used for performance that “exceeds expectations” or more?

[BlocksUnited]

I imagine the GM considered the passing of proposal 865 as ratifying all attached documents, but that is my assumption.

It seems that the employees are being underpaid, but it’s tough to justify bonus funds being used to make up a salary shortfall. They were approved by the community as a bonus, an incentive.

I come from traditional finance, not tech and so I can’t really comment on how pay should be structured.

In my experience, bonuses are given for going above and beyond what’s normally expected. With the exception of Christmas bonuses.

We want people to want to participate in the AADAO in the future. We don’t want to make it an uncompetitive place for pay.

If salaries were more equitable, bonuses make sense for those who went above and beyond their duties. Since salaries do not appear to be equitable in this instance, it’s hard to say what the right thing to do is.

We feel that the AADAO is a necessary entity and would absolutely be opposed to dismantling it.

One thing that seems clear though, is that Grace’s background seems to make her particularly well suited for this position and she seems to be doing a great job with the long-term interest of the community in mind.

[jacobgadikian]

@Cosmos_Nanny

Did you interpret a “YES” vote on Proposal 865 as constituting approval of all policies within the linked documents, e.g., the “AADAO Performance and Retention Bonus Protocol ”?

No

@Cosmos_Nanny

In your opinion, does the passage of a proposal implicitly ratify all linked documents and their contents, or should such ratifications be more explicit?

No, it does not. I think that transparency would be a great idea here.

@Cosmos_Nanny

Furthermore, how is the sufficiency of document linkage determined, and where should such links be presented?

Minimally it should be here on the cosmos Hub forum. That would be enough for me.

I do understand that the dao cannot be going to governance for every decision.

@Cosmos_Nanny

• Was it explicitly clear that the 100,000 ATOM bonus allocation for “Performance and Retention” could be utilized as compensation tools supplementing monthly salaries?

No that wasn’t explicitly clear.

@Cosmos_Nanny

Is it appropriate to use the bonus pool for contributor performance that “meets expectations” or must it be used for performance that “exceeds expectations”, only or more?

No. Should be used for when there are significant and obvious successes.

[StunZeed]

Kinda think that the previous comments miss out on the major points that are concerning.

IIV is why @Youssef must be removed. He sheds a bad light to ATOM.

@Cosmos_Nanny

The Controller further explained the origin of her professional disagreements with the GM, tracing them to February 2024. At that time, the GM had shared a document, expressly designated as “confidential,” exclusively with the Controller. This document revealed the effect of retention bonuses on monthly compensation rates.

This is wild. Where the hell do you get a MONTHLY
‘thank you for keeping your 14500$ base salary job. Here, get a bonus for staying with us for another month” - bonus??

@Cosmos_Nanny

Furthermore, the Controller alleged that subsequent to her conversation with the GM on this matter, she received a phone call from the GM’s spouse, which she described as aggressive, verbally abusive, and intimidating in nature.

Wild again. Major red flag, abusive behavior. @Youssef so you’re sending your wife to intimidate @Patricia ? She was doing her JOB, while you were trying to get away with a monthly 20k?!!

Again, must be REMOVED IMMEDIATELY. Patricia should get a retention bonus for staying with you being her abusive boss lol.

@Cosmos_Nanny

She reported being routinely accused of “over-reaching” and alleged that she had been threatened with removal if she did not acquiesce to and comply with the GM’s directives.

Yea, this is why we need oversight. So you get called out for your shit. Now everybody knows, thank you Grace.

Conclusion: looking for a new GM.

[Cosmos_Nanny]

@StunZeed

This is wild. Where the hell do you get a MONTHLY
‘thank you for keeping your 14500$ base salary job. Here, get a bonus for staying with us for another month” - bonus??

The retention bonuses are given to contributors who have been with AADAO for a minimum of one year.

20% of the bonus pool (20,000/100,000) ATOM is used for this. The amount of ATOM allocated per month for the retention bonus is based on what a contributor has a base salary on 2024.

AADAO Financial Controller strongly recommended that 2023 base salaries should be used for the retention formula, Youssef disagreed. Youssef’s wife also disagreed, and called the Financial Controller to exert her influence in the process.

This is inappropriate.

Please carefully read the spreadsheet: [AADAO Historic Compensation and Bonus Distribution

Only retention bonuses have been distributed, hitherto.

Distribution of performance-based bonuses would have started vesting beginning Sep 1 if it weren’t for Oversight withholding approval.

[StunZeed]

Gotcha!
monthly pay makes it like a salary. I didn’t vote for that.

But at the same time it’s not worth discussing because of IIV.
At least not for his case.

[MoonBoy]

1. What was actually approved in Proposal 865:

Voting YES will fund AADAO for 2024 with 975,811 ATOM. Nothing about bonuses, the community has clearly been misled and deceived.

2. Whether the bonus pool should be used for unexceptional performance:

The community should carefully consider whether it is appropriate to use bonus pool. Oversight seem to have best view by the report how this could work in the future but it needs to approved through a proposal in the Cosmos governance like it should’ve in the first place.

3. The appropriateness of the GM’s proposal in proposing/engaging a provider to execute an investigation on the investigation:

The GM’s proposal to hire an external investigator raises concerns due to potential conflicts of interest and seems like an attempt to circumvent established oversight mechanisms. This proposal should be thoroughly examined to ensure that DAO resources are not used for personal purposes or to further the GM’s own interests.

I haven’t heard Youssef’s side of the story, but I don’t believe the Oversight Committee would fabricate such claims that would jeopardize their own existence and surely has all the evidences on records. They have thoroughly done the job they were appointed to do. Based on this, Youssef could voluntarily resign or a vote of no confidence should be organized.

[Cosmos_Nanny]

@StunZeed

Major red flag, abusive behavior. @Youssef so you’re sending your wife to intimidate @Patricia ? She was doing her JOB, while you were trying to get away with a monthly 20k?!!

While there isn’t a recording of the actual calls that took place between Youssef’s wife and Patricia, there are records validating these calls happened. There are text messages before and after calls that also support Pati’s account of what was discussed. How is was discussed.

As to what Pati describes as a pattern of bullying and intimidation, there is evidence of this. He directs her to approve things and accuses her of “overreaching” often. It’s challenging to share constructive criticism with him because he becomes super defensive and hostile – I have actually experienced this myself.

He takes it to 0 to 60 quick.
“Are you accusing me of using AADAO as a slush fund?”
“Do you understand the disappointment you are causing by withholding contributor bonuses?”
“You’re overreaching”
“Stay in your lane”
“Are you accusing me of lacking integrity? You lack integrity.”

[Youssef]

Hi all,

I am writing here to share my deep concerns of the wild overreach path the Oversight Committee has been engaged in the past few weeks. I have been running AADAO since inception and I can confidently say the way Oversight behaves is political and not done in the best interest of AADAO and by extension the ATOM community itself.
AADAO is the only organization that is fully aligned and owned by the Cosmos Hub and has been since day one a net positive for the Hub. Thank you @BlocksUnited for the kind words on AADAO.

However, the situation has started to deteriorate over the past 2 months and the arrival of Grace on our Oversight. As a reminder, I was behind the initiative of creating the Oversight Committee during prop 95, which established AADAO. The objective back then was to show to the ATOM community that AADAO was a serious organization that wanted to provide the best transparency and ethical guarantees to the Hub. The lack of trust has always been an issue in the Cosmos Hub and the establishment of an Oversight and transparency function within AADAO was a direct response to this.

Public scrutiny has never been a problem for AADAO or myself, as long as it is a benevolent and fair scrutiny, not one at the service of a political and malevolent agenda. AADAO has always prided itself in being transparent and an open book to the community and the community has generally well received this transparency. In line with accepting public scrutiny and further aligning with the Hub, AADAO started the process of having a community elected Oversight member. Nothing forced us to do so. That was us deliberately giving away some of our authority as a proof of our goodwill. Our goal has always (and remains) to be the most aligned Hub’s organization and having an elected member on our Oversight seemed like the right thing to do.

While Oversight is supposed to represent and maximize the interests of the ATOM community, it is currently not doing so by severely disrupting the operations and morale of our team. ATOM is currently at a cross-road and what we need right now is an AADAO org that has a culture of peak operational performance – and not a culture of internal investigations – if we are to have a chance of saving the Hub from the dangerous negative spiral it has embarked on the past year.

We always had a positive, collaborative and open work culture at AADAO. This culture is now in great danger of being replaced by a culture driven by selective prosecution, fear, and paralysis. I have made a couple of small mistakes over the past years, and Grace makes it her full time job to dig up the issues, sensationalize them, and present them to the community in the worst possible light.

Contributors are scared to speak out and communication lines between my team and myself have been broken on purpose to isolate me from my team, hence seriously disrupting our operations. Using the cover of the ‘GM under investigation’, the Oversight has instructed AADAO contributors to record all conversations and report any conversation with me about the investigation. This has resulted in a very unhealthy work climate.

Conflicted Oversight

Grace

• Promoting a competing chain (ATONE) while holding a position in AADAO is a conflict of interest, especially knowing that the founder of ATONE is none other than JK, who decided to rage quit the ATOM community. She even dedicated to him her victory lap following her election to AADAO Oversight:
  

Patricia

• She wanted Oversight to be involved in the performance bonus allocation, which I refused to accept. Why? Because the Oversight function is supposed to be neutral and independent. Plus, the Oversight is not involved in the strategy nor in the operations functions that drive the performance. Asking for Oversight to be included in bonus distribution – which would have personally benefited herself – felt like a grave ethics violation for what is supposed to be the AADAO function with the most integrity. Since this refusal, she’s been acting with a grudge, animosity, and hostility towards me.

• Not satisfied with my refusal to include Oversight in the performance pool, she also tried to change the process for the retention compensation to again increase her own salary for 2024. In fact, following the recruitment of our admin assistant, we took away from her some of the duties she used to perform and put her back on her original salary. It was in her financial interest to base the retention on 2023 salaries instead of 2024 and she kept pushing, even after I explained her the following:

• Most of AADAO contributors are full time in 2024 while they were part time in 2023. Using 2023 as a base for the work being done in 2024 will diminish their compensation while not being reflective of the current work being one

• Many AADAO contributors changed roles and compensation in 2024. If a contributor is paid 70K in 2024, he should have retention based on that amount and not 2023 where he was making 35K.

When we recruited Patricia, it was from my wife’s referral because they had worked at an accounting firm together previously, and hence my wife has a historical relationship with her and thought she could be trusted.

Anyways, this is the original situation from six months ago where Patricia holds a grudge against me, and this is the situation the Grace sniffed out thru her “investigations”, and this is now the situation that Grace has written-up in her so-called investigation without waiting to hear my side of the story to say I am unfit to serve in leadership.

Compensation and performance bonuses

On bonuses, I’d like to point out this is a red herring problem. Prop 865 specifically described the distribution of an ATOM performance and retention pool of 100,000 ATOM in the on-chain proposal. As budget approval is a primary function of governance voting, it’s reasonable to assume that a “yes” vote means informed endorsement of this specific allocation.

Questioning the validity of clearly outlined budget items post-approval will set a problematic precedent. It will lead to a need for granular consensus on sub-items and will make Cosmos Hub governance a nightmare to navigate.

I’d also like to point out that the withholding of said bonuses is seriously impacting the team morale. AADAO contributors are all hard workers and they are doing so in a difficult context where:

1. ATOM price is sinking
2. Their paycheck is significantly hurt by the price action
3. The general public sentiment is an all time low

Talent retention is important in a hyper competitive crypto workspace and I have serious doubts the current Oversight investigation will produce any positive outcome for AADAO and by extension for the Hub.

On my own compensation

• Base salary brackets approved by Prop 865, and my base salary is within the brackets
• Performance and retention allocation approved by Prop 865, as part of the framework presented to the community and approved with the passage of Prop 865
• Last year, there were 2 Program Managers, @Better_Future and myself. This year I’m the General Manager so I took on the entire executive function.
• Managing a part time workforce last year, transitioned to a mostly full time team in 2024, and I personally have set aside all other professional obligations to work on Cosmos Hub as its driving force 10+ hours per day and 6-7 days per week
• AADAO Scope of work has significantly improved: from grants to becoming the Cosmos Hub growth DAO: grants, ventures, PSS onboarding, and Hub’s marketing

AADAO has always prided itself in being a community owned builder and a net positive contributor to the ATOM community, bringing hope back and promoting good governance. Cosmonauts, beyond the Hub and including the entire Interchain are proud of AADAO. All of this is now in jeopardy, caused by an Oversight that doesn’t seem to understand the gravity of the situation in which the Hub is and who’s forcing for an unknown agenda, in complete disconnection with the current reality.

On the investigation itself, I am more than happy to call for an independent, unbiased and qualified investigator to uncover the truth. I just don’t think the current Oversight is the right entity to do so, given the current circumstances and how conflicted it is with the only two members (Patricia and Grace), one having a grudge against me for denying her performance bonus, and two serving in the promotion of a competing project, $ATONE.

I’ll be around in the next few days to protect the hard earned reputation of AADAO and also to clear my name from these false allegations that have been shared, both within my team workspace and on this forum. If anyone would like to discuss, feel to schedule time on my Calendly:

Summary Thoughts:

1. In the future the Oversight function of any project or chain should not allow conflicted members who are also aligned or aligning with other projects, as it creates an opportunity for infiltration and muckraking. (this is the situation with Grace now)

2. If a member of Oversight commits an ethics violation by demanding bonus compensation and also manipulation of the formula of calculating retention, the community needs to see the full information about this situation, before reacting too quickly about the role of the GM in the situation. (this is the situation with Patricia now)

3. If the only two members of Oversight are acting together with somewhat selfish motives (ie Grace and Patricia together), the whole idea of Oversight being a neutral steward of the interests of the Hub is undermined. This is a challenging situation, and I would appreciate advice from the community on what to do under these circumstances. (this is the situation AADAO finds itself in now)

[Cosmos_Nanny]

@Youssef

However, the situation has started to deteriorate over the past 2 months and the arrival of Grace on our Oversight.

Situation of what? Situation of the hub? Of AADAO?

[Cosmos_Nanny]

@Youssef

AADAO is the only organization that is fully aligned and owned by the Cosmos Hub and has been since day one a net positive for the Hub. Thank you Block United for the kind words on AADAO.

Is it? This is what you say publicly. But beyond the public realms and in internal team calls, I have heard you invoke (frequently) the privileges and practices of a private and/or corporate entity. AADAO is not that. In reality, the manner in which you run the organization indicates the stakeholder with limited autonomy is the community. Not you.

[Cosmos_Nanny]

@Youssef

As a reminder, I was behind the initiative of creating the Oversight Committee during prop 95, which established AADAO.

Youssef, was it a choice? From what I recall, one of the reasons your inaugural mandate received support was due to the ab initio provision of establishing an independent and functional oversight that would provide checks and balances to core DAO operations and governance.

At the end of your 2023 mandate, you had no choice but to support inclusion of an elected member to your Oversight because the community had lost faith with your curation of the Oversight committee. It was perceived as anemic. The only meaningful action the Oversight committee performed first year was on account of my report to the GrantsSubDAO regarding the non viable scope proposed by Missions Publiques. A grantee which curiously received direct support from you in their reapplication efforts.

Giving birth to a thing does not necessarily make you a responsible steward. This is the crux of cautionary tale that is Cosmos.

Regarding Your Commitment to Oversight and Resource Allocation:

1. Jason Choi’s Employment: Given your stated commitment to establishing effective oversight, could you explain the decision to keep Jason Choi, a 2023 Senior Oversight Member, on payroll throughout the pilot year?
2. Performance and Contributions: Could you provide a detailed account of Jason Choi’s accomplishments in his senior oversight capacity during this period?
3. Concerns Raised by Contributors: Multiple contributors from 2023 have confided in me, and shared that Jason was non-performant and largely absent. Can you address these allegations?
4. Salary Adjustments: It’s been noted that Jason’s salary was reduced twice in 2023. What were the circumstances surrounding these reductions, and why were they deemed sufficient actions?
5. Retention Decision: Sources suggest that the decision to retain Jason was motivated by a desire to avoid community concern. Can you comment on this assertion?

These questions are posed in the interest of transparency and accountability.

Your responses would be appreciated as we assess the effectiveness of your approach towards past and current oversight mechanisms.

[Cosmos_Nanny]

@Youssef

While Oversight is supposed to represent and maximize the interests of the ATOM community, it is currently not doing so by severely disrupting the operations and morale of our team.

I’ve explained to you my position several times.

Respectfully, my job as Oversight is not an extended function of marketing or PR.
I indirectly can help accrue value to ATOM by ensuring AADAO’s resource utilization remains beyond repproach.

[tom]

i was so proud Jae dropped the lawsuit, i was so proud Grace got elected

until the day i saw her never ending mission was still at play

here is another step to reach the ultimate goal

even the best intentions can be driven by a fucking wrong philosophy

even the best philosophy can be driven by some fucking bad intentions

(tried my best to talk with temperance)

[StunZeed]

@Youssef

As a reminder, I was behind the initiative of creating the Oversight Committee during prop 95, which established AADAO.

You reached out to Grace in December, asking her to join. While she refused (because you don’t get to choose who is your oversight), she proposed that the community elects a representative for the oversight role. Don’t you take credit for that.

@Youssef

Nothing forced us to do so.

I would have not voted for a second run for AADAO without an elected oversight.

Next, Grace introduced herself in the election like this:

• shouldn’t be a DAO simp, shill.
  So don’t ask her to be one. If community wanted oversight to be that, they would have voted for Clyde. (“I want to show the community that aadao is doing a good job”)