DAVIS FOOD COOPERATIVE, INC.

BOARD OF DIRECTORS

MEETING MINUTES

August 6, 2007

Call to Order

The regular monthly meeting was called to order at 7:00 p.m. at the Davis Food Co-op Conference Room, 620 G Street, Davis, California, by Darius Pazirandeh, President.

Roll Call:

Directors Present: Janie Booth, Debbie Eernisse, Lucas Frerichs, April Kamen, Danyal Kasapligil (arrived at 8:12), Darius Pazirandeh, Doreen Pichotti, Steve Reynolds, Joy Rowe, Jack Young

Directors Absent: Julie Cross

Staff Present: Beth Tausczik, Kenna Krueger, Doug Walter, Eric Stromberg, Amy Radbill, Paula Osborn

Guests Present: .

Roles:

Facilitator: Lucas Frerichs

Time Keeper: Debbie Eernisse

Notetaker: Amy Radbill

The Secretary determined that notice of the meeting was duly provided as required by Bylaw Art. VIII §6(C), and that a quorum of Directors was present under Art. VIII §6(B).

Member Comments: Paula attended the board meeting for the first time, she’s newly working with Eric.

Announcements:

Janie:(for Julie) The co-op is helping the children’s …at the Yolo County Fair by making ice-cream, on August 15^th through 19^th from 5:00 to 6:00 p.m.

Joy requested an update on the member meeting about the renovation…

Consent Calendar

Retained by unanimous consent:

Approval of Minutes – June 2007 (Julie)

Task force report: there are currently no active task forces

Annual member meeting report

Excuse Joy’s absence from June meeting

Excuse Julie for vacation

Excuse Danyal for work emergency

Removed by objection:

Approve 2007-08 Calendar (Darius) moved to 6.8

Board Training TF report (Darius) moved to September

Monitoring BGM, BGM1 Unity of Control – (Lucas) moved to September

Monitoring GP, GP1, GP2, GP6 & GP7 – (Darius)moved to 6.7

Motion: Darius moved to accept the consent calendar as amended

April seconded

Vote: Motion is adopted unanimously.

Agenda Review

Amend Agenda by

4.4 Election issue raised by David and Joan about postings on the kiosk

4.5 Jack wanted a motion on the agenda to send David’s, Joan’s and my complaints to legal counsel for review.

Motion: Joy moved to adopt the agenda as amended

Seconded by Darius

Motion carried unanimously

Election of Officers

Motion: Darius nominated Darius for the office of president

Motion carried unanimously

Motion: Jack nominated Steve for the office of vice president

Motion carried unanimously

Motion: Janie nominated Julie for the office of secretary

Motion carried unanimously

Motion: Deb nominated Deb for the office of treasurer

Motion carried unanimously

Reports

Presented: Eric & Kenna presented B4, third quarter financials, and the accounting manual. Eric presented a letter from attorney Therese Tuttle regarding patronage refund permit requirements. Eric presented a B11 report on the architect interview process, and on the purchase of patio furniture

Questions:

Joy thanked Eric for narrative breakdown on budget, liked action plan on E5, RE: upcoming member survey—what’s the plan for preparing for online version of a survey? Do we have the capacity right now?

Doreen: E5 got postponed to September

Eric recommended Joy call Seth on E5

Doreen: RE: patronage refund—are we still pursuing a written opinion from Dept. of Corporations?

Eric asked Therese Tuttle to do so…

Jack: Thought we were making money every quarter and was surprised that we aren’t

Eric pointed out that we periodically have quarters when we don’t. Sales decline when students leave, etc. We do cut back on employee hours when sales decline, but not so much as to cause hardship.

Jack: was there a budgeted loss for this quarter?

Lucas and Eric confirmed that there was—pointed it out in the budget…

Discussion of wage policy—Eric explained that our goal has been to pay median wage for Yolo county; we increased starting wage a dollar an hour(?) this year

Darius: RE: Procedures—clarified that the BOD doesn’t need to approve?

Eric confirmed

Lucas: The advertising being over by $21,000—the figures say $13,000

Eric offered to get Lucas copy of detailed report; also pointed out that there was more Enterprise advertising, $900 to Ink Monkey for promotional items, etc.

Lucas: Margins were good all over the store—thankfully beer and wine have improved drastically; unfortunately dairy and cheese and deli and meat didn’t make margin, and have consistently not been making margin

Eric pointed out that deli is now bringing in more packaged items; also trying to keep labor hours tight

Paula commented that it changes things to bring in product from outside—there’s an adjustment period; but there are a lot of good comments from shoppers about the changes

Darius: Is your concern that there’s a budgeted margin that we’re not making? Comments from directors that the deli was losing money are not appropriate unless they indicate that there is a compliance issue, and there is no policy which says that the deli may not lose money. If a director thinks that the deli losing money is a problem, there should be a motion to direct the GM through written policy or resolution not to allow the deli to lose money. On the other hand, comments about the deli failing to meet margin are appropriate because this indicates a policy violation.

Eric pointed out that the majority of NCGA stores do not make money from their delis…many stores accept that they’ll have losses in that department

Kenna: Commented that the quarterly loss of 64,000—a lot of that is that we’d expected to be much further along in the remodel, so a 12,000 loss looks better than a…listed a number of expenses that were significantly over budget; some of those are understandable facility maintenance costs. Not sure why advertising is so far over budget. Store supplies is kind of problematic in that we budgeted 1.27% of sales and it’s 1.48%. As sales increase, you expect store supplies as a percentage of sales to decrease, since not all departments are big users of supplies.

Jack: Always wondered about the deli: why do freestanding restaurant type delis do okay and grocery delis don’t?

Paula pointed out that physical layout is part of it - the wall prevents deli staff who are making sandwiches from seeing that there is a customer who is waiting by the coffee area.

Eric: pointed out that restaurants have higher sales since they’re focused businesses, rather than grocery stores where people come in for things other than the deli

Beth pointed out that we offer better wages and benefits, we’re open for a longer period of time, the labor situation is tougher for us…

Steve: wanted a thumbnail explanation on seasonality in the store…

Eric: Summer’s the slowest time of the year because of lack of students and heat. Business picks up when students return; there’s a spike during holidays; but best time of year are the three months of spring

Steve: Commented that deli/meat departments have perishable goods at high costs…

Eric confirmed

Steve: Do we anticipate an increase or decrease of sales during phase 1?

Eric: if our experience mirrors that of other stores, we’ll have an increase; most of what others stores experienced was increased traffic, but increased sales by basket should happen as well.

Kenna: On deli: we really haven’t been successful for a long time—we’ve never reached critical mass of sales volume. Hoping that remodel will boost sales. As sales go up labor costs become more efficient—but whole thing is driven by sales.

Paula: Examples of physical configuration that make a difference—flipping position of sandwich counter…

Motion: Lucas moved to accept GM report as presented (B4, Eric’s report of compliance re: B11, with B11 as related to B6, compliance with B4 in terms of not violating state or local laws on patronage refund, NOT VOTING COMPLIANCE ON ELECTION ISSUES at this point)

Doreen seconded

Motion carried unanimously

Recess at 8:25; reconvene at 8:40

Presented: Darius presented the report of the election committee on activities during the election. (This report was previously presented in June.)

Jack wrote a letter discussing each item individually, so he presented that, with his discussion of each point. (Attachment A to these minutes)

Motion: Darius moved to Accept report of compliance on equal access to web page

Joy seconded

Motion carried unanimously

Motion: Darius moved to Accept report of compliance on equal access at member meeting Doreen seconded

Motion carried unanimously

Motion: Doreen moved to skip further discussion and go straight to a vote on remaining issues

Deb seconded the motion

In Favor: Danyal, Doreen, Deb, Janie

Opposed: Lucas, Joy, Steve, Darius, Jack

Abstained:

Motion Failed

Discussion on compliance on election mailer:

Jack: BOD voted at last meeting to accept the results of the election?

Doreen confirmed that we approved the election but not the election committee report although we did discuss it at length and the purpose of tonight's agenda was to conduct the vote without a discussion.

Jack’s concern is about how future elections are run. Wants cleaner elections in future.

Doreen believes that there was no non-compliance in relation to the election mailer, newsletter and impartial analysis. At the time election mailer went out, it was so early in the process that there was no awareness of the opposition issue—only had awareness of the West Davis store question.

Jack: That’s why these points are here (in his letter).

Doreen: regarding use of mailing list, no other member asked—but they would have been given access had they asked.

Darius: The issue is whether it’s appropriate to spend money out of advertising budget in order to advocate under the guise of education—the flyer is advocacy. The flyer seems to be a hybrid of advocacy and education, and should that come out of the advertising budget.

Doreen: Where does it say that we can’t send a mailer to support an issue—we can’t do it in the newsletter, but in a mailer, we can. We were virtually unanimous on this on the BOD. Wants to hear discussion about whether there are other directors who think we aren’t in compliance on the election mailer?

April: Same concern that Darius expressed—seems like advocacy when we should be focusing on education.

Darius: This is two issues—board compliance and management compliance. Regardless of whether an opposition group has formed, when we put out a glossy flyer that we as a corporate body have easy ability to do—the membership list isn’t an issue, I think it’s more the money. What would they (opposition group) have to do to get equal access? Even if an opposition group hasn’t formed yet, there’s a reasonable chance that a group could form. Whatever the staff and board are advocating, that shouldn’t be paid for by the store—we can pay for it as members.

Doreen: That’s not what the policy says. In the future we might choose to publicize that the list is available, but that’s not what the policy says.

Jack: Past precedent is that people can pay for such things themselves.

Doug: I’m not aware of the agenda being adjusted. I remember a powerful letter advocating buying our building that said, 'if you could own for the price you now rent…nobody can come up with that letter—but I remember that very specifically going on. Also — the administrative policy is supplemental to the Bylaws and there is no current layer of Board policy. The Board should consider if it does want to write policy about elections.

Darius: I think the content of the policy is the board’s responsibility.

Doreen: I want to propose that we move all of these to our next month’s agenda, and discuss it online... We don’t have enough information to discuss these—the agenda hasn’t allotted for enough time to discuss each of these…

Janie: Why did some people vote against going straight to the vote?

Jack: What I heard Doug say is that we don't have a binding policy.

Doug: Well, that may be what you heard, but I was referring to the level of review that went on before this went out, and it was not at the level of Board policy

Doug and Jack both agreed that they're both more concerned with future outcomes and that the Administrative policies were not optional, but rather were binding.

Kenna: you’re not going to finish the discussion of these issues tonight. You should just vote tonight, and then appoint a task force to look at more clearly defining election policy…in my opinion the mailer was over the top.

Darius: I want to skip any further discussion, ad vote knowing that the election task force is going to be discussing these things more in depth.

Steve: Perhaps there was technical compliance—looking back, I can see how we got sucked into this. I’m not questioning the election results, but I’m not happy with the process.

Doreen: Hind sight is 20/20. We did what we thought was in the best interest of the Co-op.

Motion: Darius moved to end discussion and vote on the three issues.

Doreen seconded

In Favor: Danyal, Steve, Joy, Darius, Lucas, Doreen, Deb, Janie

Opposed: Jack

Motion passed

Motion: Darius moved to accept report of compliance on election mailer

Doreen seconded

In Favor: Danyal, Joy, Doreen, Debbie,

Opposed: Jack, Steve, Darius, Lucas,

Abstained: Janie

Motion failed

Motion: Lucas moved to accept report of compliance on newsletter advertisement

Deb seconded

In Favor: Danyal, Joy, Lucas, Doreen, Debbie, Janie

Opposed: Darius, Steve, Jack

Motion carried

Motion: Darius moved to accept report of compliance on impartial analysis

Doreen seconded

In Favor: Danyal, Darius, Doreen, Debbie, Janie

Opposed: Jack, Steve, Joy, Lucas

Motion carried

Joan/David Thompson KIOSK ISSUE: allotted five minutes for discussion

David claims that information about patronage refund was not posted; No one knows who took down Joan’s letter

Doreen: Joan’s letter was posted on the kiosk. I intentionally went to look for it and saw

it there.

Motion: Deb moved to accept report of compliance with election policies 2.1 and 2.3 with regard to Joan Randall and David Thompson’s complaints

Darius seconded

In Favor: Danyal, Steve, Joy, Darius, Lucas, Debbie

Opposed: Jack

Abstained: Doreen

Motion carried

Motion: Jack made motion for DFC to send all election complaints to legal counsel including Jack’s complaint of 7/30, Joan’s complaint about impartial analysis and Jack’s previous complaint about equal access for review of potential legal liability

Lucas seconded

Doreen made friendly amendment to allow two months for this…

Lucas commented that he thinks this will clarify the issues and help insure that they won’t come up again…

Darius commented that he doesn’t like motion because he was going to do this anyway (write a letter to Therese Tuttle).

Steve commented that this letter might be useful for the next Election task force if they're looking to write Board policies

Doreen wanted to ask Eric whether he thinks this a reasonable use of our attorney’s time and fees.

Eric thinks it is.

In Favor: Jack, Steve, Joy, Lucas, Doreen, Debbie, Janie

Opposed: Danyal,

Abstaining: Darius

Motion carried

Motion: Darius moved to table all agenda items listed as "discussions," and only deal with those agenda items that were listed as "motions." (This was a motion to revise the agenda, not a motion to end debate on any particular motion. )

Lucas seconded

Motion carried unanimously

Julie (through Janie) doesn't want to be on the task force as a Director because she expects to serve it in her role as staff, since so many of her responsibilities will be touched by the t.f.

Motion: Joy moved to form the Membership Linkage Task Force, with authority to Initiate and support membership linkage events (specifically those under GP9) for September ’07 through June ’08. The task force will be authorized to spend up to $2,000 to bring BOD into compliance with GP9.

Steve seconded

Motion carried unanimously

Motion: Darius moved to revise E1 monitoring schedule. The monitoring calendar for 2007-2008 is revised such that Policy “E1 – We are full service grocery store with Choice” will not be monitored in December. It will still be monitored in June.

Joy seconded

Julie (through Janie) and Steve agreed that this seemed like a good revision

Beth said she’s much more use to the store in the holiday period working in the store rather than writing reports

Motion carried unanimously

Motion: Darius moved to form an “E1 task force” with April as lead with authority to call monthly meetings with staff:

A) to develop an appropriate monitoring report that will not be unduly burdensome on staff resources, but which meets the standards set forth in policy E1, GP, BGM2, BGM4;

B) to monitor progress as set forth in the June 2006 E1 monitoring report; and

C) to generally exercise fiduciary duties within the scope of policy E1.

If, in the opinion of the General Manager, the E1 task force is placing unreasonable demands upon the resources of staff, he will advise the Board President who will make an appropriate temporary decision as well as agendize this topic for the next Board meeting.

Joy seconded

Motion carried unanimously

Presented: Discussion of strategic planning was postponed till next month.

Presented: Discussion of alternative financing was postponed till next month.

Motion: Darius moved to Form Bylaws revision task force

A “Bylaws task force” with Lucas as lead is hereby formed with authority to review the current bylaws, meet with staff, contact attorney (with ability to spend up to $10,000), and produce a Bylaws revision, subject to full Board approval, to submit to the membership for the 2008 election. The Bylaws task force will consider the following topics, but is not limited to these topics:

Patronage refund cleanup

Election timing

Revisions recommended by Laddie Lushin

Staff-Directors

Alternate-Directors

Other items from retreat?

Steve seconded

In Favor: Jack, Steve, Joy, Darius, Lucas, Doreen, Debbie, Janie

Abstained: Danyal

Motion carried

Motion: Darius moves to authorize Board review of GM’s file in September 2007

The Board authorizes a regular, routine review of the General Manager’s personnel file in a closed session in September 2007. In future years, the Board will conduct a routine review of the General Manager’s file in a closed session in the first regular Board meeting of the Board cycle. This review is pursuant to “at need basis” based on the formation of a new Board as a new “supervisor” of the General Manager. This authorization will not be construed to: A) authorize any individual director to review the General Manager’s file at other times without full Board approval; or B) authorize routine inspection of the General Manager’s file at other times during the year without a specific need such as misconduct.

Steve Seconded

.

Janie noted that Julie asked to go on record “I would like to go on record as being opposed to this motion. It has been our best practice to keep all personnel matters on a “need to know” basis, and there is no demonstrated need here. If the Board chooses as a group to authorize this, I’d like to be sure that the matter of the letter that was raised in August 2006 has been resolved before this review. (As a side note, I’ve never reviewed a personnel file of one of my staff members at the Co-op.) “

Janie asked what’s in the personnel file?

Eric: Everything—it’s only reviewed on a need to know basis, and it shouldn’t be shared with anybody who doesn’t have a need to know. We have a responsibility to keep that confidential

Darius: any discipline problems…what else would we expect to see there?

Jack; Past reviews—what you can do better on, what you’re doing great on…

Darius: That’s not in the personnel file, that’s in monitoring reports. We do that every month. When we’re monitoring compliance, we evaluating job performance.

Doreen: So what is in the file?

(Contract, any disciplinary action, pay rate…)

Joy: What has fallen into a need to know basis in the past?

Lucas: I’ve never seen the file with everything compiled in it. I’ve seen contracts, etc—but not the full personnel file. Just an item at a time as it’s come forward…

Deb: And I don’t feel a need to see it. I have the monitoring reports, and that’s how we monitor his performance

Steve can’t imagine a more basic board function than to monitor the general manager.

Doreen: So would staff be abel to see the file? I would think they shouldn’t be able to

Lucas: I never saw any of that as a staff member on the board

Darius: Somehow this seems like it gets personal—this isn’t about Eric’s file, it’s about the GM’s file. I think one of the problems we have is a lack of continuity from board to board, so it seems like it would be appropriate as a best practice to look at it and know what’s there, and then put it away.

Danyal: Are we clear on differentiation between personnel file and a performance review or an monitoring of job progress. Any supervisor checks that employees are meeting stated goals, but that’s different from a personnel file that contains confidential information.

Deb: If people want to know how Eric has been performing over the last year, they can read the minutes.

Eric: Just so you know the practices that we use—when an employee’s file is reviewed, it’s done by someone who is direct supervisor to the person and the file doesn’t leave the personnel office. We can only release information to another institution if the employee requests and permits it.

Joy: From what Darius said, this sounds like it should be a policy and not a motion…

Lucas: That’s part of what I was going to say. If it’s going to be done, it should be done on a one time basis.

Motion: Lucas made substitute motion to table this to next month’s agenda after researching what other cooperatives do.

Darius seconded

In Favor: Janie, Debbie, Doreen, Lucas, Darius, Joy, Steve, Jack

Opposed: Danyal

Motion carried

Motion: Darius moved that a “B11 task force” with Janie as lead is hereby formed with authority to call monthly meetings with staff to monitor progress on the renovation and to generally exercise fiduciary duties within the scope of policy B11

If, in the opinion of the General Manager, the B11 task force is placing unreasonable demands upon the resources of staff, he will advise the Board President who will make an appropriate temporary decision as well as agendize this topic for the next Board meeting.

Lucas Seconded

Julie would suggest changing monthly meetings to “regular meetings”

Darius wants to keep it monthly—doesn’t want it to be too often. If the task force feels they need to meet more often, that’s okay, it doesn’t mean that they can’t meet more than once a month

Motion carried unanimously

Motion: Jack moved to approve the ’07-’08 board calendar as written, with amendments to be made, if needed, in September.

Lucas seconded

Motion carried unanimously

Meeting Evaluation

What Went Well?

April appreciated that Darius explained process for new people

Steve appreciated Doug’s thermostat diligence

Doug felt there was a good level of reading materials beforehand, being prepared, etc.

Darius likes the beginning of the year routine—did good stuff, got the ball rolling

Steve liked the way people looked out for the water he spilled

Upgrades

Bigger cups

Next Meeting – September 10 (the second Monday, owing to the holiday)

Facilitator: Doreen

Time Keeper: Joy

Recorder:

There being no further business to come before the meeting, it was adjourned at 10:05 p.m. by a motion made by Lucas , seconded by Darius, and passed unanimously.

/s/ Julie Cross, Secretary

__________________________________ ______________________

Secretary, Davis Food Cooperative, Inc. Date Approved

Attachment A to the August 2007 Minutes of the Davis Food Co-operative

Monday, August 06, 2007

RE: Item 4.4 DFC 2007 proposition #1 loan election process

To: Darius Pazirandeh and the DFC Board

As summarized in my email date Mon 7/30/2007 9:15 AM, during the 2007 DFC election regarding proposition #1 following campaign policy were violated by DFC Board and or Management:

(2.1) STATEMENT OF CAMPAIGN POLICY.…If members request more information from the staff of the Co-op on election issues, such questions shall be made in writing directed to the General Manager. The General Manager shall answer, or cause to be answered, the question in writing and both the question and answer will be posted on the election display.

David Thompson’s letter to the DFC President and Board lists the specific violations.

(2.5) CO-OP NEWSLETTER AND CO-OP ELECTIONS. Endorsements for Board candidates or Bylaws amendments will not be printed in the Co-op newsletter. The newsletter is not published frequently enough to allow timely response to subjects raised. Such endorsements may be placed on the election display. A notice will be published in the newsletter that any endorsements received will be posted on the election display.

DFC Board and / or management used the May Newsletter (page 13) to support a YES vote on the loan election. This is clearly a violation.

(2.6) USE OF MAILING LISTS. The Board will direct staff to grant to candidates, or proponents or opponents of ballot issues, access to the Co-op's mailing list in conformance with California Corporations Code Sec. 12600. Mailing material to the membership for such a person shall be at that person’s expense.

The policy the Board and / or management must personally reimburse the DFC for the design, printing and mailing costs of the “Renovation 2007” brochure.

(2.7) CAMPAIGN SPENDING. Co-op policy is to discourage candidates and their supporters from spending large amounts of money on Co-op election campaigns. This policy shall not be construed to obviate the Co-op’s duty to educate members and to substantively address proposals that will be voted on, nor shall it prevent equal and reasonable access to publicity, as mandated by Bylaw IX, Section 7.

The four color flyer and the large May newsletter space represent large sums of money when compare to all other prior DFC elections and are in violation.

Due to the above violations the DFC 2007 proposition #1 election is NOT in compliance with the DFC campaign policies.

Motion: The 2006-2007 DFC Board members will reimburse the DFC for the design, printing, mailing and all other related direct and overhead costs of the “Renovation 2007” brochure in accordance with campaign election policy 2.6.

Respectfully submitted,

Jack Young