Board Re-Submits 2006 Amendment

by Board of Directors, Wedge Co-op

During last year's Wedge election the Board asked members to vote on a proposed change to the Wedge Bylaws that would prohibit members of the Board of Directors from being employed by the Co-op and store employees from participation as Directors. The intent of the amendment was to help the Coop avoid possible conflicts of interest and other problems that might occur from having a person serve in both roles. The amendment passed by a vote of 495 to 203.

However in the past year, at the request of employees and members, we have re-examined both the wisdom and appropriateness of the amendment and the way the proposed by-law change was presented to our membership.

Putting aside for a moment the amendment's "rightness" or "wrongness," the Wedge newsletter article that described the rationale for the amendment presented only the Board's point of view, as was our policy for board-recommended amendments in the past. This was done because of our understanding and belief that the Board is elected to represent the interests of the members to the best of our ability. For amendments that were technical and/or non-controversial that approach was fine. For one that in hindsight had implications and complexities beyond what we imagined, it was not the best course of action.

During the first three months after the balloting the Board worked to build a deeper understanding of the implications of the amendment. We offered employees opportunities to weigh in on the issue, and weigh in they did publicly, privately and passionately both for and against it. We explored the policies of more than 20 grocery co-ops throughout the U.S. We learned that more co-ops allowed employees to be board members than did not, but there was no clear consensus that this was an effective practice yielding more benefits than problems. We talked with national leaders in the Cooperative and Fair Trade movements and again there were diverse points-of-view on the issue.

In the end, after gathering, reviewing and discussing everything we could find that seemed relevant, the Board reached the conclusion that there were two distinct issues to be addressed and voted upon:

1. Should the Board place the proposed amendment before our members in 2007 with a more balanced presentation of the possible "reasons for" and "reasons against" its passage? The Board voted yes, it should.
2. Should the Board reverse its position on the amendment and withdraw its support for it? The board voted no, it should not. Rather, the Board voted to reaffirm its position that employees of the Co-op should not be eligible to serve as Directors and vice versa.

We believe it will be helpful for members in reconsidering the amendment to have a clear understanding of the Board functions. To that end, the facts and background that follow will be helpful in informing your vote.

• The Board of Directors addresses only issues of broad Co-op policy. Beyond hiring and supervising the General Manager the Board does not get involved in operation of the store, the wholesale business or the online business in any way.
• No Wedge employee has served on the Board during the past 15 years.
• The Wedge is organized and legally defined as a "consumer co-op" rather than a "worker co-op," meaning an employee, like any Director, would be elected to represent the interests of the members, not the exclusive interests of the employees. Most of the time those interests run parallel. sometimes they may not.
• A Nominations Committee consisting of one Director, one Wedge employee and a member who is neither a Director nor employee determines the slate of candidates who will be voted upon by the membership from among all applicants. Those applicants are screened for qualifications and experience relevant to financial oversight and other skills required by the Board.
• Boards such as this one require consensus and unity to be effective. That doesn't mean discussion and disagreement aren't welcome. Whether it reaches consensus or not, the Board votes on issues which come before it. When votes are divided, the majority opinion becomes the sole position of the Board. There are no minority opinions offered or provided. After the vote, the Board speaks with one voice.

In the sidebars to this article you can review rationale for voting yes on the amendment and rationale for voting no. If you have questions or need further clarification, please feel free to contact either the Wedge Member Services Director, Elizabeth Archerd (612-465-8817 or elizabeth[at]wedge.coop) or the chair of the Board's Trusteeship Committee, Jack Stanton (612-822-6183 or jack.stanton[at]clynch.com). We welcome questions but ask that you limit your conversation to questions of clarification.

Rationale for Voting Yes

on the By-Law Amendment (Affirming last's year's vote to not allow Directors to be employees of the co-op nor permit employees to be Directors)

• The Wedge General Manager is hired, supervised and evaluated by the Board. The Board also determines her/his compensation and other benefits. Having an employee on the Board would put that Director in the position of either "supervising" and "evaluating" their own boss or refraining from participation and voting on issues related to the General Manager, a major responsibility of the Board. If a Director abstains from voting that sets up potential 3-3 vote deadlocks between the remaining Directors.
• The Board frequently evaluates and determines whether to commit the Co-op to long-term investments in growing the business versus taking short-term returns that could be passed along to employees through the profit-sharing program and members in the form of rebates. All Directors face one potential conflict, employee Directors would face two.
• An employee serving on the Board could potentially create issues for the General Manager in effectively managing that employee and others in their department or circle of friends. The employee Director also could be at an unfair advantage over other applicants in applying for another Wedge job or promotion.
• An employee serving on the Board would always have a great deal of confidential information not available to other employees. It's always challenging to handle this information, far more so when it impacts colleagues and friends.
• If an employee serving as a Director needed to be terminated because of performance, the General Manager and the Board would be put in the extremely difficult position of having a sitting Director who had been fired by the Co-op.
• Co-op employees enjoy a level of recognition and familiarity by the membership which might give them an unfair advantage when running for a position on the Board against non-employee members.

If Yes wins majority vote the bylaw will remain as it is now:

Article III - Directors
Section 2. (c) No Director may be a paid employee of the cooperative at any time.

Rationale for Voting No

on the By-Law Amendment (Overturning last year's vote)

• Wedge Co-op employees interact with members and other shoppers on a daily basis and can offer that unique perspective to the Board.
• Employees can offer the Board insights into the impact of potential policy decisions on other employees and store operations. Employees also can bring stability to the Board, since many are aware of more of the Wedge's history.
• The ethical responsibility to deal professionally and confidentially with personnel, planning and strategy development, real estate and other sensitive issues applies equally to all Directors, not just employees who happen to be Directors.
• An employee Director would be in a position to share non-confidential information and insights on Board operations with other employees, potentially deepening communications and the bond between the two groups.
• Procedures to address conflicts of interest are already in place on the Board and involve self-disclosure (revealing any potential conflicts), abstaining from voting on issues where a conflict exists, third-party oversight and transparent decision-making. Beyond that, all Directors are expected to put the interests of the Co-op above their own personal interests.
• Wedge employees are deeply committed to and passionate about the success of the organization. Some employees believe the amendment creates a second class of members and reduces their opportunity to contribute.

If No wins majority vote, the previous bylaw language will be reinstated:

Article III - Directors
Section 2. (c) No more than one (1) director may be a paid employee of this cooperative at any given time.