Greetings: Kay asked several questions. I’ll attempt to address most of them now, but others will have to wait until I’m home this evening.
Jay, where your proposals would amend language in the existing AA&BL, it would help me a>great deal if we could receive a comparison document indicating exactly where language is being added and deleted.
In the proposed new By-Law 47, the expression "investment interest" appears in the Definitions paragraph, which bear upon the Disclosure requirement later on and which applies to the Board member's "family" as well as to the individual. Do I correctly understand the intention of this new By-Law is to require members of the Board to disclose all investments -- stocks, bonds, mutual funds, etc. -- owned by the Board member and his or her family? How about trusts of which the person and/or family members are beneficiaries?
Kay------- The proposed Conflict of Interest Rules would not require a disclosure of an investment or a business interest unless there would be a direct and material financial benefit to the Board Member or a member of his or her family as the result of a vote. The specific provision is as follows: “i. A Board Member shall recuse himself or herself from discussion or voting on any matter in which he or she has a material and direct financial benefit, as defined above, that may reasonably be affected by the outcome of the vote. Upon recusal of a Director, the Division Vice-Director shall fulfill the duties of the recused Director in discussion and voting on such matter.” Under the current Article 11, the mere ownership of an investment or business interest that may result in a financial benefit to a Director, no matter how trivial or remote, would disqualify that Director. You also ask whether trusts would be included. The intent is that if the Board Member has control over the trust containing investments that would result in a direct and material benefit as the result of a Board Action the Conflict of Interest Rule would apply. The Conflict of Interest policy does not go beyond the current Article 11,it is the difference between a randomly pointed shotgun and an aimed rifle with a known target. It simply requires that Board Members disclose facts when he or she may have a material and direct financial benefit by reason of a Board action. Even in that event it limits the result to recusal from discussion and voting on the issue unless the conflict is pervasive. Would we really prefer that Board members not disclose such conflicts? ---------
Does "family" refer only to one's spouse and minor children, or could it also include one's parents and adult children? Does it include the partners of unmarried couples who live together?
Kay -- We can define family in any way we want. My definition would be immediate family members, i.e. spouse and minor children. I defer to state law as to the effect of same sex marriage or civil unions. ------------
The E&E committee will be busy checking out all that information about the contents of our investment portfolios, and they will have some interesting judgment calls to make. What criteria will define a conflict or pervasive conflict based on investments? Surely we don't intend to make that up as we go along? How many of us incumbents would find ourselves ineligible under the proposed new rules? We can't answer that because we don't know what criteria the E&E would apply.
What happens to the financial information after the E&E reviews it? Don't we need a privacy >policy about that?
Kay ---- for the reasons set forth above only investments that have a material and direct financial impact would be an issue. Certainly, a privacy policy could be adopted. -----------------
If the idea behind these changes is to enlarge the pool of potential Board members, the >requirement to disclose the gory details of one's family's financial resources to the E&E >committee may have quite the opposite effect. After all, to most challenger candidates the E&E >committee members are total strangers.
Kay----- Easy now- Nothing in the proposed policy suggests your 5th amendment rights regarding search and seizure nor such privacy rights as afforded by the 9th amendment waived. More seriously, the policy simply places an obligation on a candidate to disclose financial and business interest that would be materially and directly affected by Board action. At present we ask candidates an open ended question at the time they file and say no to anyone with even a remote possibility of a future conflict. Then we never ask again during the term of office. This targets the disclosure to instances where an actual or perceived conflict might arise and then provides a mechanism to avoid the conflict, in most instances without eliminating the member from further participation except with regard to the single conflict at hand. It would seem strange to me that we would exclude candidates based on the potentiality that a conflict might arise in the future because of an employment or business connection but didn’t want to know about material investments that might color a Board members comments or vote on an issue. --------------------------
It is proposed that, "Neither the Board nor any Committee of the Board shall vote upon any >proposed matter, transaction, contract, or arrangement in connection with which an actual or possible conflict of interest has been disclosed by a Board Member until such time as the Elections and Ethics Committee has addressed the actual or possible conflict of interest." How would that affect the League's ability to carry on business in a timely way, if the Board and its >committees have to call halts for the E&E to make determinations about conflict of interest? It might happen rarely, or it might happen a lot. Who can say?
Kay----- When was the last time we had an emergency situation that required an immediate vote that wasn’t related to an election issue? The Board is by any measure a deliberative body. Waiting a few weeks to get the facts and provide an opportunity to review them doesn’t seem like much of a burden. Nearly everything that comes to the Board is known prior to the meeting. That is particularly true of any significant action where a vote is required. As to the frequency of such events I would the past is a reasonable indicator. If we really expect there would be a large increase in non-election conflicts perhaps we haven’t been sufficiently scrupulous in the past, but I doubt that. -----------------------------------
What happens if a Director disagrees with the E&E's determination that he or she should recuse? Is there any appeal? What happens if both Director and Vice Director have a conflict on a particular matter, so neither can vote? As long as there is a quorum, does it matter that some Divisions might not be represented in a vote? Is that situation likely? Probably not. But sometimes the unlikely worst case is the case, as the captain of the Titanic had a brief >opportunity to consider.
Kay: I agree and will be submitting a revised motion later today with an appeal process. We could also include a provision to deal with simultaneous conflicts of the Director and Vice Director, but that seems remote in extremis. -----------------------------------------
There is a discrepancy between the existing provisions of Article 11 and the provisions of By-Law 12 that might be addressed in this context. Article 11 says that Vice Presidents are subject to the Article. That's fine. But under By-Law 12, "any Vice‑President other than the First Vice‑President" can be a compensated employee of the League. This allows the Board to elect a League employee to be 2nd VP or International Affairs VP. But an employee of the League can't pass Article 11 requirements as it now reads, let alone as Jay's amendment would re-cast it. I suggest that we should amend By-Law 12 to delete the phrase "and any Vice‑President other than the First Vice‑President," to eliminate the self-contradiction regarding Vice>Presidents.
The Treasurer can also be a compensated person under By-Law 12, but the proposed new By-Law 47 brings the Treasurer under the conflict of interest rules in the Definitions paragraph. I'm >not clear on how the logic of that is going to work. Kay: Why wouldn’t we want Vice Presidents who participate in Board discussions and the EVP and Treasurer to be included in a Conflict of Interest policy? I would be willing to support an appropriate change to assure they are covered by the policy. ------------------------
Before the Board votes one way or the other on these proposals, I hope that we'll have the patience to think things through and throughly air out the possible/probable consequences. As Fried used to say, "The devil is in the details." I just don't know if sufficient consideration can be done at one Board meeting. These are not trivial changes and would be a significant legacy, >both practical and philosophical, that we leave to future Boards.
Kay: One persons patience is another persons delay. I first raised this issue three or for years ago and again presented this concern some two months ago. There was considerable discussion on the issue this past Fall. Nearly a month ago I offered to send the working documents to any interested Board member. There were two takers. Putting off this question won’t make it go away. The simple fact is that nearly every significant Non-Profit Corporation or Association in the United State has a Conflict of Interest and Disclosure Policy. There is no good reason why board members should not be required to disclose Conflicts of Interest, real or perceived, as they arise. You are absolutely correct these aren’t trivial changes. These are significant issues to the Board but more significant to the members. The questions at hand are: 1. Who should choose Board representatives, the Board or the Members? and 2. Should Board members be required to disclose conflicts of interest? I for one believe the members with adequate information are up to the task of choosing their representatives on the ARRL Board and that the obligation to disclose conflicts of interest ought not end with election to the Board whether as a Director or as an Officer. 73, Jay, KØQB