Greetings. After reviewing Jim's thoughtful review on the EC authority issue, I have had a chance over the weekend and today to do a bit of research into the roles of Executive Committees and I have taken another look at my assumptions (and Jim's) in view of the prior discussion, which I greatly appreciate his contributing to. I am quite keen on the need to reach consensus among the Directors with respect to the authority of our Executive Committee to act on behalf of the Board -- and whether or not the EC has the authority to take actions which impact or establish policy -- in the intervals between board meetings. Failing a consensus about this, the EC’s actions are subject to question (which has actually occurred recently). So I would like to keep this thread in the minds of Directors. Too, the issue has been repeatedly debated and hashed over (indeed sometimes anguished over) by ARRL Board members for well more than two decades in my experience. Notably, in doing research on the subject, I find that there is a strong movement in the literature of Board governance consultants to either rein in or abolish Executive Committees completely, in view of the simplicity of modern communications available and the arguably outdated concept of Executive Committees (another argument heard repeatedly, from time to time, around our Board table). However, I am constrained to note some concern about Jim's argument that our EC, as of right now, does not have the authority to adopt policy or to make decisions which impact established policy during intervals between Board meetings. I am concerned about it for three reasons: (1) it is contrary to the historical purpose of having an executive committee of a corporation’s Board (non-profit or otherwise) in the first place, and contrary to the historical authority normally afforded an executive committee; (2) it doesn’t logically follow from the language of the Articles and Bylaws, inasmuch as our EC is under no obligation at all to refer matters back to the full Board during intervals between Board meetings; and (3) most importantly, if accurate, it deprives our EC of any guidance whatsoever as to what the limits of its own authority actually are, leaving the EC rudderless and effectively without direction. That is not a productive interpretation of the function of the Committee. As I will explain, I believe that my earlier interpretation both empowers the EC to operate at a high and flexible level of administration of ARRL’s affairs between Board meetings and at the same time protects the Board’s prerogatives in all cases, all without any violence at all to the language of our articles and bylaws. There is no doubt at all but that historically, the general understanding of the role of an Executive Committee of a non-profit Board is to act on behalf of the Board of Directors during intervals between Board meetings, either on a plenary basis or subject to specific limitations imposed on the authority of the Executive Committee by the Board. Robert’s Rules of Order provides one iteration of this historical role: 50. Boards of Managers or Directors, Boards of Trustees, Executive Committees, etc. Committees of this class are essentially small deliberative assemblies, subordinate to the body that appoints them, with their duties and authority, and the number of their regular meetings and their quorums, defined by the parent body, or by its authority. Boards or Committees of this class are usually appointed by organizations that meet only annually or quarterly. With such an organization it is customary and necessary to delegate to a committee, usually known as the Board of Managers or Directors, all its authority, with slight limitations, to be exercised between its meetings. The by-laws of the Board are adopted by the parent body, or the Board may be authorized to adopt its own by-laws. *It is usual to authorize the Board to appoint from its membership an Executive Committee of a specified number who shall have all the power of the Board between the meetings of the Board, just as the Board has all the power of the Society between the meetings of the Society, except that the subordinate body cannot modify any action taken by its superior.* The Executive Committee should be small and the members should live near enough each other to be able to have frequent regular meetings, besides special meetings in emergencies. Where the organization is local, such as a society for sustaining an orphan asylum, the Board of Managers usually divides itself into committees having charge of different branches of the work during the intervals between the monthly or quarterly meetings of the Board, when these committees report on the work done. It is seldom that resolutions or other matters are referred to boards or committees of this class for them to report back to the society with recommendations. If papers are referred to them it is usually for their information and action. They are organized as any other deliberative assembly with a chairman and a secretary, whom they elect if they are not appointed by the society. Frequently the by-laws of the society make its president and its corresponding, or executive secretary, ex-officio, president and secretary of the Board of Managers. A governance advisory organization describes the role of an Executive Committee as follows: In addition to the board’s officers, the executive committee includes committee chairs and the organization’s chief executive officer. The executive committee, even considering its membership, still answers to the entire governing body and is bound by the board’s voting power and the provisions of its organizing documents. Some nonprofit boards give executive committees broad powers to act on behalf of the board between meetings and when addressing urgent situations. Some executive committees directly supervise the organization’s CEO, including compensation decisions and performance evaluation. A nonprofit association dedicated to good governance of hospital boards explains it this way: An Executive Committee’s authority derives from the authority of the board, and one of the more important decisions a board makes is to define the role and authority of the Executive Committee. Some boards, especially large boards whose members are geographically dispersed, choose to vest their Executive Committees with significant power to perform the board’s work through regular Executive Committee meetings. Other boards limit the Executive Committee’s power by authorizing it to meet only as needed and to act only on urgent matters. Some boards grant the Executive Committee no formal authority at all.The Executive Committee provides a mechanism for board leaders to engage, within the limits set by board policy and the bylaws, in decision making, oversight, and communication on important organizational matters. The Executive Committee’s specific responsibilities include exercising some or all powers of the board between regularly scheduled meetings. (Note: Some boards restrict the Executive Committee’s authority to “urgent matters.” Some boards do not permit the Executive Committee to take final action on certain matters such as amending bylaws, removing a board member from office, hiring or removing the CEO, obligating the organization to new debt, or selling or acquiring a major asset. Some boards grant no decision-making authority to the Executive Committee. Some boards require that the full board approve any actions by the Executive Committee, while others require only that the committee’s actions be reported at the next full board meeting). It is apparent from this that an Executive Committee’s authority is derived from the authority of the Board. There is no doubt but that the ARRL Board can nullify or overrule an action of ARRL’s Executive Committee, and of course our Board can delineate the role of the Executive Committee. However, absent the placing by a Board, via changes to articles or bylaws of one or more specific limitations on the authority of an Executive Committee, I would suggest that the role of the Executive Committee is to administer the affairs of the organization on a plenary basis during the intervals between Board meetings, as our Articles of Association expansively read. A 2009 survey by the Governance Institute revealed that about half of executive committees have the authority to take final action on behalf of the full board (noting that this doesn’t mean they necessarily exert that power regularly. Some possess but never or rarely use this authority). About a quarter of executive committees may take final action only when the full board cannot be convened on an urgent matter between scheduled board meetings. About a quarter may take action subject to ratification by the full board at its next regular meeting. Some executive committees may act on any matter with the full authority of the board. Others are restricted by their bylaws from taking final action on certain matters such as changes of ownership of the organization or subsidiaries, acquisitions, facility closures, election and removal of directors, CEO removal and selection, and amending the bylaws. Looking at these generalized authorities, it would appear as though there is a wide range of authority that executive committees have. However, it would also appear that in the main, those nonprofits which do not grant plenary authority to their executive committees explicitly limit the authority of the executive committee to perform specific tasks. Our Articles and Bylaws do not specifically limit the authority of the Executive Committee. Instead, like apparently the majority of nonprofit associations, our organizational documents are very broadly stated. As I noted earlier, Article 6 of the Articles of Association states as follows: “During the intervals between meetings of the Board of Directors, the affairs of the Corporation shall be administered by an Executive Committee consisting of….” Further: The Executive Committee may in its discretion submit for determination or decision by members of the Board of Directors by mail or electronic vote any proposal pending before the Executive Committee.” While Jim’s analysis distinguishes between the authority of our Board to govern per Article 4 of our Articles of Association (“the affairs of the Corporation shall be governed by [the] Board…”) and the Article 6 authority of the Executive Committee, between meetings of the Board to “administer” those same affairs, there is no definition offered anywhere to give any context to the distinction that Jim draws. While admittedly the terms governance and administration may have different meanings ascribed to them relative to the ability to make policy, there is not to be found anywhere in our Articles or Bylaws any limitation on our EC’s authority between Board meetings to make decisions which have policy implications. Absent any such specific limitation, I would argue that there is a wide discretion afforded the EC by our Board in the EC’s decisionmaking authority. Nor does Jim’s attempted distinction between governance and administration explain the Article 6 discretion explicitly given to our Executive Committee to decide for itself if and when to refer matters to the full Board. If the Board did not want our EC to have wide discretion in decisionmaking authority, not only should it have specifically delineated the issues that would have to be referred to the full Board; it never would have given the EC the sole discretion to determine whether, and what issues it should handle itself and which should be referred to the full Board. I would therefore suggest that Jim’s distinction between governance and administration is not a meaningful one in this context. Finally, if Jim’s distinction was a valid one, it would offer absolutely no roadmap at all for the Executive Committee. We can’t have a situation in which our EC has no practical means of determining whether or not an issue coming before it is within the scope of its authority or whether deciding it, no matter how urgent the issue is, would exceed its jurisdictional boundaries, because the boundaries are not set. That would make no sense and it would obviate the entire purpose of having an Executive Committee. Furthermore, if Jim’s analysis is correct, the Article 6 opportunity -- but not the obligation -- to refer matters to the full Board would make no sense either because under Jim's analysis, the EC would be obligated (not just empowered) to refer some unspecified number of issues to the full Board without knowing what those are. That makes no sense either. Therefore, I would suggest that in ARRL’s case in particular, where our Board is relatively large and geographically disparate; where it meets formally only twice per year; where the Executive Committee typically meets only twice per year at intervals relatively evenly spaced between Board meetings; and where our organizational documents give very broad authority to the EC without any specific limitation, to administer the affairs of the organization between Board meetings; and the authority, but not the obligation to exercise its discretion in referring matters that arise between Board meetings to the full Board, the EC must be deemed to have quite broad powers to act on behalf of the Board during those intervals. Doubtless the Board can overrule its own Executive Committee at will so there can’t be any usurpation of the Board’s discretion, ever. No harm, no foul. All that said, there is a lot of academic criticism now about the need for and value of executive committees because mass communications facilitates full board consideration of policy determinations on a much more expeditious basis than was permitted in the days prior to electronic mass communications. Maybe it is time to reevaluate ours. However, should the Board wish to specifically delineate the scope of its delegation of authority to the EC, it should do so explicitly, and it should carefully evaluate the benefits and drawbacks of doing so with reference to the organization’s ability to react quickly to rapidly changing regulatory, legal and advocacy issues of any restriction on the EC’s authority. Just as the Board’s ability to communicate and act more quickly than in the past has been facilitated by electronic communications, so have Amateur Radio regulatory affairs decisionmaking obligations been accelerated. Do not underestimate the “need for speed” in legislative, legal and regulatory affairs. 73, Chris W3KD On Fri, Jul 22, 2016 at 12:46 PM, <k6jat@comcast.net> wrote:
Greetings All,
Given the obvious importance of corporate governance issues to the organization, I feel compelled to weigh in on the subject and respectfully disagree with a couple of Chris' more expansive conclusions. Also, please understand that the following is not intended to be legal advice and is only my personal opinion as a Vice Director. While I agree that on the issue which brought this matter to a head, i.e. – the Board’s legislative initiatives, the EC was fully within its authority to implement Board policy, I respectfully disagree that the EC has the authority to independently govern or make policy for the ARRL. On the contrary, ceding authority to the EC to do so would not be in the interests of good corporate governance and, as a general proposition, would render decision making by the full Board relatively superfluous.
The rationalization for the assertion that the EC can wield the full authority of the Board between regularly scheduled Board meetings is not well-founded. The Articles of Association state that “[t]he affairs of the Corporation shall be governed by [the] Board . . . “ while “[d]uring the intervals between meetings . . . the affairs of the Corporation shall be administered by an Executive Committee . . . .” (Arts. 4 & 6.) Two clearly separate functions are being described: the Board “governs” while the EC may “administer” at other times. In my practice, the words “administer” or “administrative” connote mere ministerial, perfunctory or other non-substantive tasks that do not rise to a level which would require decision-making approval or violate an existing legal restraint (such as the matters set forth in section 40 of the Bylaws). “Govern” or “governing” identifies a far broader exercise of power and substantive decision-making.
It is not plausible that the Articles were drafted without regard to the fundamental differences in the meanings ascribed to these words. The duties and powers assigned by these separate terms are not casually interchangeable nor do they specifically grant the EC “broad authority *to make decisions* concerning . . . the affairs of the corporation . . . .” Counsel’s statement that “[t]his can only reasonably be given an interpretation that credits the breath of the authority contained in that term” merely assumes the desired conclusion that the EC also has the full power to govern the Corporation when it sees fit. I submit that this conclusion is not good corporate governance nor is it in harmony with the specific language, spirit or intent of the Articles and Bylaws of the ARRL.
In my opinion, the Articles are not internally inconsistent nor are they in conflict with the Bylaws as Counsel seems to suggest. If the EC did have the broad decision making authority promoted by Counsel, the provision in Article 6 for submitting any proposal pending before the EC to the Board for determination would truly be superfluous. Rather, the provision creates a procedure for the EC to employ whenever any proposal before it may appear to invade or implicate the Board’s authority over corporate policy and governance. While it is true that Bylaw 40 should not be read as a restrictive or exhaustive list for the scope of the EC’s functions, it does provide necessary guidance as to the types of administrative tasks assigned to it by the Articles. Indeed, as noted by Counsel, the Bylaws provide a variety of other options (and in this day and age there are technological alternatives) for providing a rapid decision-making capability in truly emergent situations.
Unfortunately, the results of any decision-making process are always subject to challenge, whether legitimate or not, and no set of rules can hope to definitively address every conceivable situation that will arise or the process would lack the necessary flexibility to arrive at a rational result. Therefore, I do not believe any attempt at clarification is warranted at this time. Indeed, any argument that the EC has exceeded its authority in the context of the League’s legislative initiatives is merely unsubstantiated opinion.
73, Jim K6JAT
*ARRL Pacific Division Vice Director*
------------------------------ *From: *"Christopher Imlay" <w3kd.arrl@gmail.com> *To: *"arrl-odv" <arrl-odv@arrl.org> *Sent: *Monday, July 18, 2016 7:37:42 AM *Subject: *[arrl-odv:25477] Authority of the Executive Committee
Greetings.
During Saturday’s Board Meeting session a discussion occurred with respect to the role of the Executive Committee. A Director asserted the view (or implied) that the Executive Committee might not have been a sufficient authority to review, adjudicate and approve strategies for revision of the language of the Amateur Radio Parity Act during negotiations with the Community Associations Institute, and that it might have been more proper to have submitted such strategies, negotiations and revisions to the full Board instead. This is not a small issue inasmuch as the answer draws into question the validity of decisions of the Executive Committee in certain contexts, including but not limited to our legislative effort.
Having since had a chance to review our Articles of Association and Bylaws I would continue to respectfully suggest that the Executive Committee is in fact the proper entity to review and approve legislative strategies during periods between Board meetings. However, if the Board is not convinced by the following analysis, it is requested that the Board please clarify this soon, so that we do not fail in the future to obtain necessary approvals for various advocacy initiatives.
First of all, even if the Director’s argument that the EC does not have the authority to determine policy for the organization between Board meetings is correct, and that the EC has the authority only to execute the previously determined policies of the full Board, it is the case that the previously determined policy of the Board – to obtain relief by legislation from CC&Rs – is in the process of being executed; and EC oversight of that effort and approval or disapproval of specifically negotiated terms (in near-real-time) is no more than oversight of execution of Board policy anyway.
Secondly, however, and more to the point, Article 6 of the Articles of Association states as follows: “During the intervals between meetings of the Board of Directors, the affairs of the Corporation shall be administered by an Executive Committee consisting of….” Further: The Executive Committee may in its discretion submit for determination or decision by members of the Board of Directors by mail or electronic vote any proposal pending before the Executive Committee.” The broad authority conveyed by the first quoted portion of the Article indicates that the Executive Committee has broad authority to make decisions concerning the administration of the “affairs of the Corporation” during intervals between meetings of the Board. This can only reasonably be given an interpretation that credits the breadth of the authority contained in that term. The EC has the discretion, but clearly not the obligation, to refer policy issues, or issues that affect policy, to the full Board. That provision would not be necessary if the EC did not have the broad authority to make policy decisions between Board meetings, but instead had only the authority to execute predetermined Board policies.
Though Bylaw 40 lists specifically delegated tasks of the Executive Committee, including the duty to “[a]pply… existing Board policy to make decisions between Board meetings” that cannot be fairly viewed as a limiting provision but rather an enabling one and an assigned task. The reason is that the broad authority of the EC conveyed by Article 6 cannot be limited by any bylaw provisions; Articles of Association by definition trump conflicting bylaw provisions as a matter of well-established corporate law. Second, Bylaw 40 cannot therefore be fairly read as an exhaustive recitation of the authority of the EC, but rather a listing of enumerated specific tasks that the EC is to do regularly. Finally, it is noted that the third bullet task given to the EC is stated as follows: “Assisting staff and General Counsel in Board recommendations for petitions to the FCC and other governmental and international agencies.” The Board has approved our legislative initiative aimed at the United States Congress. We are attempting to implement it. This requires support from the Board on a near-real-time basis. In a true short-fuse situation, our normal procedure would be to consult with the President and the CEO, pursuant to Bylaws 31 and 35. Where time permits, we would normally consult by e-mail with the Executive Committee. Presumably, if the Executive Committee feels that any aspect of our strategy for enacting the Parity Act called for referral to the full Board, they will do so.
If the Board is not satisfied with the foregoing interpretation, it is respectfully requested that the Board clarify Article 6 and Bylaw 40. It will not do to draw actions of the Executive Committee into question or to create any impression that the Executive Committee may have exceeded its authority. That is an allegation that has been made (I believe without any merit at all) by the NTS dissidents, by the way.
Thank you.
73, Chris W3KD
-- Christopher D. Imlay Booth, Freret & Imlay, LLC 14356 Cape May Road Silver Spring, Maryland 20904-6011 (301) 384-5525 telephone (301) 384-6384 facsimile W3KD@ARRL.ORG
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-- Christopher D. Imlay Booth, Freret & Imlay, LLC 14356 Cape May Road Silver Spring, Maryland 20904-6011 (301) 384-5525 telephone (301) 384-6384 facsimile W3KD@ARRL.ORG