[Eg-oversight-board] Fwd: Evergreen ByLaw Comments

Tue May 8 14:21:28 EDT 2018

CW MARS operates with an executive committee but again, it is a large
membership organization and has the responsibilities Ruth indicates.

<http://www.cwmars.org>

Tim Spindler | Executive Director | CW MARS

tspindler at cwmars.org | 508-755-3323 x120

http://www.cwmars.org

On Tue, May 8, 2018 at 1:25 PM, Terran McCanna <
tmccanna at georgialibraries.org> wrote:

> Yes, I can see how that would be more efficient with a larger board and
> with membership.
>
> Terran McCanna
> PINES Program Manager
> Georgia Public Library Service
> 1800 Century Place, Suite 150
> Atlanta, GA 30345
> 404-235-7138
> tmccanna at georgialibraries.org
>
>
> On Tue, May 8, 2018 at 1:22 PM, Donna Bacon <donna at mobiusconsortium.org>
> wrote:
>
>> MOBIUS has an Executive Committee for our Board which is comprised of the
>> President, Past President, and Vice-President/President-Elect.  The EC
>> makes the majority of day to day decisions and who I generally, as the
>> Director, have discussions with about membership business or brainstorm
>> with.  We have 13 members on our Board and there are many decisions that we
>> make that do not require a vote from the whole Board.  This just makes us
>> more efficient at operating our organization.
>>
>> I would not think that the Evergreen Board would need an Executive
>> Committee since you do not have membership or staff. Most of your
>> discussion and decisions need to be discussed by the whole Board.
>>
>> Donna
>>
>> On 5/8/2018 12:11 PM, Terran McCanna wrote:
>>
>> +1 to Ron's comments.
>>
>> I'm unsure how the Executive Committee's decision-making responsibilities
>> would differ from the overall Board's decision-making responsibilities. Can
>> the Executive Committee consist of the entire board?
>>
>> As for indemnity, hopefully it will never come to that, but it makes
>> sense to me that a majority of the board would be required to determine
>> that a director did not act in good faith.
>>
>>
>>
>> Terran McCanna
>> PINES Program Manager
>> Georgia Public Library Service
>> 1800 Century Place, Suite 150
>> <https://maps.google.com/?q=1800+Century+Place,+Suite+150++%0D%0A++++++++++++++Atlanta,+GA+30345&entry=gmail&source=g>
>> Atlanta, GA 30345
>> 404-235-7138
>> tmccanna at georgialibraries.org
>>
>>
>> On Mon, May 7, 2018 at 12:03 PM, Gagnon, Ron <gagnon at noblenet.org> wrote:
>>
>>> Mike,
>>> Sorry to be late in responding...
>>>
>>> We at NOBLE use email votes (sparingly) and they can be effective and
>>> leave a good audit trail.  I would support that capability for Evergreen.
>>>
>>> As to the Executive Committee, I would have concerns about that -- can
>>> it be larger than two for a minimum?
>>>
>>> For budget, I would go along with your suggestion of 10%.
>>>
>>> Email for notice is good.
>>>
>>> President and Treasurer should be different persons.
>>>
>>> Thanks!
>>>
>>> Ron
>>>
>>> On Fri, May 4, 2018 at 11:40 AM, Mike Rylander <
>>> miker at equinoxinitiative.org> wrote:
>>>
>>>> All,
>>>>
>>>> As promised, here is the initial response from MOBIUS' lawyers to
>>>> Karen's direct comments and suggestions.
>>>>
>>>> I said before that the suggestions were mostly rejected, but that isn't
>>>> quite right.  The lawyers are starting from an adversarial position, which
>>>> is understandable given their stated past experience, as opposed Karen's
>>>> suggestions starting from a more amicable default.  As a practical matter,
>>>> I take Karen's suggestions as an aim to streamline and simplify
>>>> communication and action in the common case, whereas the MOBIUS' lawyer's
>>>> apply more structure up front in an attempt to protect against "activist
>>>> directors" (their words in one case).  The question before us is which do
>>>> we want to enshrine in our by-laws -- my interpretation of the choice could
>>>> be summed up as: do we value efficiency and assumption of good-faith over
>>>> prescribed defenses against internal strife?
>>>>
>>>> I can be convinced in either direction, but I tend towards the former
>>>> by default.
>>>>
>>>> To be clear on my position, I believe that most of Karen's suggestions
>>>> (particularly on practical matters such as the use of email for certain
>>>> functions) do not weaken any overall protections we have, and just avoid
>>>> overhead given the way our community works.  The biggest issue surrounds
>>>> indemnity, which we can discuss in more detail, but the example I provided
>>>> works to limit the issues raised below by restricting indemnity to only
>>>> litigation that arrises from the fact that a director was, in fact, a
>>>> director.  Anyway, I would appreciate all input you care to provide.
>>>> Thoughts?
>>>>
>>>> Thanks again, everyone!
>>>>
>>>> --
>>>> | Mike Rylander
>>>> | President
>>>> | Equinox Open Library Initiative
>>>> | phone:  1-877-OPEN-ILS (673-6457)
>>>> | email:  miker at EquinoxInitiative.org
>>>> | web:    http://EquinoxInitiative.org
>>>>
>>>>
>>>> ---------- Forwarded message ---------
>>>> From: Donna Bacon <donna at mobiusconsortium.org>
>>>> Date: Thu, May 3, 2018 at 9:13 AM
>>>> Subject: Evergreen ByLaw Comments
>>>> To: Mike Rylander <miker at equinoxinitiative.org>
>>>>
>>>>
>>>> Mike,
>>>>
>>>> See the comments below from our attorneys.
>>>>
>>>> Most of these comments relate to the committees permitted under the
>>>> bylaws.  While it is standard to contemplate such committees being formed
>>>> in the corporate documents, as a practical matter, entities of this size
>>>> actually forming sub-committees is rare and it is much more common for the
>>>> whole board to oversee the operations.  Please see our comments in red
>>>> below.
>>>>
>>>>
>>>>
>>>> Section 3:15 Actions By Board Without A Meeting
>>>>
>>>> Under the draft bylaws all decisions must be taken in a meeting, or
>>>> otherwise the only mechanism is by unanimous written consent. The bylaws
>>>> are silent as to whether email constitutes proper written consent. You may
>>>> want to make this looser so that a majority of the board can vote by email
>>>> without a meeting. This has been a major pain point for other orgs I've
>>>> worked with.
>>>>
>>>>
>>>>
>>>> Generally speaking we do not recommend email as sufficient for
>>>> unanimous written consent due to the record keeping requirements for
>>>> corporate entities.  How Evergreen has described its decision-making
>>>> process is that the board will make a decision, likely via internet chat
>>>> and without a formal meeting, and then document that decision in a
>>>> resolution that is circulated and signed by all of the board members.  That
>>>> final, signed resolution then goes into the corporate record book.  This
>>>> avoids questions as to the final language that was approved, makes it
>>>> easier to ensure all signatures are obtained, and is a best practice for
>>>> the statutorily-required record keeping.
>>>>
>>>> Section 4:1  The Executive Committee.
>>>>
>>>> The executive committee section is very strong, which is ok if you're
>>>> careful (the board can appoint a committee of only 2 people to do almost
>>>> everything the board does). So I wanted to flag that.
>>>>
>>>>
>>>>
>>>> Does Evergreen want to change this?  Note, as written the board has
>>>> discretion over whether to even form an executive committee and which
>>>> powers to give it.  There are carve-outs explicitly listed for certain
>>>> actions the board cannot designate.  As written, this gives flexibility to
>>>> the board on whether to create the committee and whether to give it very
>>>> limited or very broad powers.
>>>>
>>>> Section 4:2 The Finance Committee.
>>>>
>>>> This says that any major change in the budget must be approved by the
>>>> Board. This is vague and is silent as to materiality. It may be better to
>>>> give the committee a little bit of clear flexibility in case you do form a
>>>> finance committee.
>>>>
>>>>
>>>>
>>>> Does Evergreen want to change this?  Note, as written the board has
>>>> discretion over whether to even form the financial committee.  To keep
>>>> controls on the committee, its powers are limited to exceed or change the
>>>> budget, which is left in control of the board.  This is fairly standard.
>>>>
>>>> Section 4:5 Meetings of Committees.
>>>>
>>>> You may want to amend this to permit the use email for notice.
>>>>
>>>>
>>>>
>>>> We generally do not permit email for required statutory notices as the
>>>> Missouri statutes do not specify the effective date for electronic notice
>>>> absent proving the email was received.  If there is a dispute between the
>>>> corporation and a board member, this can be difficult.  With mail, the
>>>> statutes specify the effective date based on the mailing without requiring
>>>> proof of receipt.  Moreover, any regular meetings of the committee do not
>>>> require notice; notice only applies if there is a special meeting outside
>>>> of the normal schedule.  As most decisions will likely be made outside of
>>>> official meetings, those will be evidenced by a resolution signed by all
>>>> members and waiving the notice requirements.
>>>>
>>>> Section 5:1 Officers.
>>>>
>>>> The bylaws don't permit the President and Vice Chairman to be the same
>>>> person, which is I'm sure consistent with state law, but some states
>>>> require that the president and treasurer not be the same person, so that
>>>> there is some level of fiscal controls. You might want to consider adding
>>>> that in this case.
>>>>
>>>>
>>>>
>>>> There is no such restriction as to the president and treasurer being
>>>> the same individual under Missouri law, and therefore we do not add such a
>>>> limitation in the bylaws.  The authority of the president and treasurer are
>>>> controlled by the board, which is how the bylaws address this issue.  If
>>>> you want to add additional restrictions, let us know.
>>>>
>>>> Section 5:2  Appointment and Term of Office
>>>>
>>>> There's a 1 year term limit on officership. You might want to leave
>>>> those limits up to the board if Missouri law permits. While you do one year
>>>> terms now, that might not be convenient in the future for some reason, and
>>>> then you'd have to amend the bylaws.
>>>>
>>>>
>>>>
>>>> The term of the directors must be specified in the bylaws or articles
>>>> under Missouri law.  We typically specify the term in the bylaws rather
>>>> than the articles as the bylaws are easier to amend.  The 1 year term of
>>>> directors was requested by Evergreen.  As the officers are all currently
>>>> board members, which is typical, we want the terms of directors and
>>>> officers to match, otherwise an individual’s term as an officer may not be
>>>> over even if their term as director is complete.  It can be changed in the
>>>> future by amending the bylaws.
>>>>
>>>> Section 6:2 Fiscal Year
>>>>
>>>> I would let the board fix the fiscal year, with it initially as the
>>>> calendar year.
>>>>
>>>>
>>>>
>>>> The fiscal year is most commonly listed in the bylaws.  While not a
>>>> statutory requirement, many banks and other institutions prefer it be
>>>> listed in the bylaws.  The fiscal year as initially established is the
>>>> calendar year.  If the board wants to change it, we can amend the bylaws.
>>>> If Evergreen wants to remove it from the bylaws, we can add it to the
>>>> consent resolution.  However, any change to the fiscal year would still
>>>> need to be approved in a resolution of the board signed by all members.
>>>>
>>>> Section 6:9 Executive Director
>>>>
>>>> I would beef up this section to anticipate the possibility of other
>>>> employees.
>>>>
>>>>
>>>>
>>>> This section is intentionally left vague as the board does not
>>>> anticipate hiring any employees, but does plan to retain an outside company
>>>> to handle its operations.  We do not recommend having two companies or
>>>> individuals designated to the same “executive director” position.  The
>>>> board can hire other contractors (or employees) to perform any number of
>>>> functions, but we would not recommend vesting more than one person/entity
>>>> with the title “executive director”.
>>>>
>>>> Section 6:11 Books and Records
>>>> D. Inspection  Procedure
>>>>
>>>> I would consider deleting "(c) demonstrate a direct connection between
>>>> the purpose for
>>>> inspection and the requested records." I don't understand why a
>>>> Director should have to explain why they want to see the records. It seems
>>>> like an unnecessary bar - I think Directors should be engaged with the org.
>>>>
>>>>
>>>>
>>>> The bylaws also note that the directors can inspect corporate records
>>>> in accordance with applicable law.  We have the limitation regarding
>>>> connection in the documents as we have seen litigation tactics from
>>>> activist directors who are in opposition to the corporation use their
>>>> inspection rights offensively in the litigation to cause the corporation to
>>>> waste time and money.  For the most part, directors do not use the formal
>>>> process specified in the bylaws to request information if the relationship
>>>> is healthy (they just email the appropriate person and such information is
>>>> provided).
>>>>
>>>> Section 6:12  Indemnification and Liability of Directors and Officers
>>>> D.
>>>> A majority of the board determines whether a Director was acting in
>>>> good faith, etc. in order for the indemnity kicks in. If we're at the point
>>>> where this section is invoked, something has gone very wrong. Does it make
>>>> sense that the majority of the board are the ones to decide if the standard
>>>> is met? I could imagine situations that are very muddy. At least consider
>>>> putting in a limit on the discretion of the board in that case.
>>>>
>>>> This limitation is standard in most bylaws.  The limitation protects
>>>> the corporation from a director seeking to take advantage of the
>>>> indemnification section by invoking it to fund litigation adverse to the
>>>> corporation’s interest.  We have seen indemnification sections invoked by
>>>> directors that use the section to fund the director’s own litigation
>>>> against the corporation.  If the majority approval is not obtained, the
>>>> indemnification section will still apply if the director obtains a court
>>>> order enforcing the section, so the board cannot override the
>>>> indemnification provided in the bylaws.
>>>>
>>>>
>>>>
>>>> --
>>>> Donna Bacon
>>>> Executive Director
>>>> MOBIUS
>>>> 111 E Broadway, Ste 220
>>>> Columbia, MO 65203
>>>> 573.268.1845
>>>>
>>>>
>>>> _______________________________________________
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>>>> ersight-board
>>>>
>>>>
>>>
>>>
>>> --
>>> Ronald A. Gagnon
>>> Executive Director
>>> North Of Boston Library Exchange (NOBLE)
>>> Danvers, Massachusetts  01923
>>> 978-777-8844
>>> www.noblenet.org
>>>
>>> _______________________________________________
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>>> http://list.evergreen-ils.org/cgi-bin/mailman/listinfo/eg-ov
>>> ersight-board
>>>
>>>
>>
>>
>> _______________________________________________
>> eg-oversight-board mailing listeg-oversight-board at list.evergreen-ils.orghttp://list.evergreen-ils.org/cgi-bin/mailman/listinfo/eg-oversight-board
>>
>>
>> --
>> Donna Bacon
>> Executive Director
>> MOBIUS
>> 111 E Broadway, Ste 220
>> Columbia, MO 65203
>> 573.268.1845
>>
>>
>
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