DAVIS FOOD COOPERATIVE, INC.
BOARD OF DIRECTORS
MEETING MINUTES
August 1, 2011
Call to Order
The regular monthly meeting was called to order at 7:05 at the Davis Food Co-op Teaching Kitchen Conference Room, 537 G Street, Davis, California, by Steve Reynolds.
Roll Call:
Directors Present: Janie Booth, Travis Breckon, Julie Cross, Stacie Hartung-Frerichs, Desmond Jolly, Sarah Palmer, Ben Pearl, Steve Reynolds, Frank Fox, Dina Biscotti
Directors Absent: Sam Citron
Staff Present: Doug Walter, Eric Stromberg
Guests Present: Lucas Frerichs entered the meeting at the halfway point.
Roles:
Facilitator: Steve
Time Keeper: Stacie
Notetaker: Nathan Milos
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:
Janie: I like the teaching kitchen class bulletin board near the bathrooms
Dina: I had a nice conversation with a colleague about SCRIP; her purchases go towards Caeser Chavez school.
Julie: I went to Our House. The hostess used to shop at the Co-op as a little kid and had been on the cover of our newsletter. She remembered me. I thought it was cool to have someone remember me.
Review Ground Rules:
Read by Steve
Announcements:
Stacie: I wanted to describe two things in the packet. One is…I went to Seward Co-op; they had a really great flyer about investing in the Co-op. The other thing is their equivalent of the annual report, which they call their scorecard. They show their metrics each year.
Steve: The audit task force has met and determined to engage Teresa Castanias to do the taxes; we’ve decided to retain Gilbert and Associates to do the audit. In our audit they had a note that they couldn’t review our taxes because they’d done them. We had the opportunity to get the leading Co-op tax person. We have room in the engagement letter to use her for general consultancy.
Q&A:
[Janie describes the purpose of the Q&A.]
Eric: This past year we spent around $10,000 doing energy efficiency upgrades. We are on track to reduce our energy use 11% (that’s $20,000). Energy Smart Grocery contacted us for an energy trade journal because we’ve implemented just about every recommendation they’ve suggested.
The other thing I put in the Q&A was that we had to adjust our budget because of Trader Joe’s. The changes we made resulted in a savings of $240,000. Even though we keep about a million dollars in cash, that’s not a lot of money – it’s about 20 days of business. Steve had asked about this information. We would’ve gone through a quarter of our reserves if we hadn’t made these changes.
Agenda Review
Amend Agenda by
Stacie: I want to add a closed session to discuss GM compensation.
Steve: I’ll add 7.4: Audit
Julie: I’d like to pull 4.5, which is Sam’s 2nd reading of GP5. This item has consistently not
appeared and I’d like to ask that it be removed until we hear from Sam.
Janie: I can pull 3.8 the Website introduction.
Julie moves to adopt agenda as amended
Dina seconds
Motion passes unanimously
Julie moves to accept Theodora Consolacion’s resignation
Steve Seconds
Motion passes unanimously
Julie moves to appoint Frank Fox to Theodora’s seat
Desmond seconds
Motion passes unanimously
3.1 Duty of Care and Duty of Loyalty presentation
[Babak Yousefzada provides a presentation on Care and Duty of Loyalty and answers individual board member questions]
3.2 Motion: Appoint Sarah Palmer as 2nd Alternate Director
Julie moves to appoint Sarah Palmer as 2nd Alternate Director
Dina seconds
Motion passes unanimously
3.3 Elect Officers
Julie: Who would like to be treasurer?
Janie: You have to come up with the budget (which we already did) and keep track of expenses.
Frank volunteers.
Steve nominates Frank as treasurer
Dina seconds
Motion passes unanimously
Stacie nominates Julie as secretary
Janie seconds
Motion passes unanimously
Julie nominates Stacie as vice president and Janie as president
Dina seconds
Motion passes unanimously
3.4 New director training plan review
Julie: We’ve done parliamentary procedure and meeting process. We just did duty of care and Janie just did monitoring. I will talk to Kenna about the financial indoctrination. For a store tour, set a time with Eric.
Janie: I didn’t realize that Babak wasn’t going to talk about duty of loyalty.
Stacie: Maybe we can put 15 minutes for questions about duty of loyalty on the next agenda.
3.5 Thank you for outgoing directors
”
Motion: Julie moves Resolved, that the Board thanks outgoing Directors Teddy Consolacion and Kevin Wolf for their service to the members of the Davis Food Co-op. Further resolved, that in recognition of their service, their Superworker discount be extended from July 1, 2011 through June 30, 2012.
Seconded Stacie
Motion carried unanimously
3.6 Report on 2011 CCMA meeting in San Diego
Janie: This might be a good thing to table. Please read this and let us know if anything stands out. I have a few things that I’ll copy and put in your boxes. Let’s table this until September.
3.7 Strategic planning retreat proposal
Janie: There’s an added twist. Art Sherwood is going to be in Sacramento on…
Stacie: …September 24th I believe. Cooperative Development Services has several training modules – one is for the whole board, but they also do trainings around introductions and refreshers. It’s $250 a person. We did find out if there is a lot of interest to participate in the whole board training, it might be a way to reduce the cost.
Frank: What does he charge for the workshop?
Janie: I don’t know, but I wanted to see if people were interested first.
Stacie: If you had more information about the training… If people are interested in September 24th, send an email to the board.
Steve: It sounds to me like we’d get a lot of bang for our buck.
Eric: Is Art well versed in policy governance?
Dina: Very. He discusses topics that are sticky in a lucid, engaging way.
Julie: I want to point out the Eat Local Fair is that Friday Night. But I would be willing to give up a Sunday for a private lecture – or even Monday night.
Janie: I’ll get more information and send it out.
Stacie: Side note: Michael Healey is also a consultant.
Break: 8:45; Reconvene: 8:59
4.1 Approve 2011-2012 Board Calendar
Janie: I took the calendar from last year; I made a few changes based on notes I took last year.
Stacie: Most are taken off the actual policy. I’m going to go through my changes.
October 3 meeting the agenda should be posted on the 26th. Under November, the Patronage refund should be moved to February. On the January 23rd meeting, I want to make sure we form the GM Contract Task Force.
Steve: We should also move the Patronage letter to track that.
Stacie: The store and food, B12, which we report on in May includes our merchandising policy, which is reported much earlier. I was wondering if we should move the merchandising policy to May as well.
Julie: For the September meeting, the agenda is posted on Labor Day. Do we want to change that so we aren’t paying Nathan time and a half? So the packet will be due September 2nd. I would like to do the Ends reporting the same, but don’t we need to ask Eric to set new metrics?
Janie: I’ll bring this back again.
4.2 Charter Task Forces
Julie: The audit task force does not need to be chartered; it is the only one that does not dissolve. Steve are you the lead?
Steve: I’m the lead, Dina is on the task force, and our non-board member is Jack Young.
Frank: I’d like to join the audit task force.
Steve: We are changing the discount to task force members when they do a lot of work; is this the time to bring that up?
Julie: You should send an email to Doug.
Julie: Dina has agreed to chair the membership linkage task force. I move to form the task force as written. (To ensure that Sections C, D, E & F of Board Policy GP9: Trusteeship and Relations to Members are fulfilled and reported to the Board as a whole. Additionally, to assist all Board Task Forces to recruit members-at-large. Authority to spend up to $3,000 annually. Physical task force meetings will be held quarterly, will be open to the general membership, and will be publicized to members. Directors will be enlisted to attend at least one of the 12 Co-op Events scheduled (see Event-O-Rama list), plus the Annual Meeting and Loan events, as Directors.)
Steve seconds
Motion carries unanimously
Julie: Do we want to charter a Bylaws task force tonight?
Stacie: let’s do it next month.
Member owner capital task force
Steve as lead
Stacie
Julie moves to charter the member owner capital task force as written with Steve as the lead. Charter: To define the member loan program based on information provided by Staff and present options to the Board of Directors.
Janie seconds
Motion passes unanimously
Desmond joins B6 task force.
Julie moves to charter the B6 compliance task force amended to report in December with Steve as the lead. Charter: To review compliance with B6 through the lens of DFC Co-op insurance policies to be reported in September. No authority is given to spend money.
Janie seconds
Motion carries unanimously
4.3 Assignments to monitor policies and procedure review
Julie: What we did last year was Janie said, “Assign someone.” So I assigned people new policies. New directors were assigned policies later in the year. Does anyone object to continuing online surveys?
Janie: I think if you are assigned a policy and you think there should be a binary option instead of a range.
Frank: I never saw any board job descriptions…
Julie: It’s written in the policy.
Stacie: If you’re struggling with how to monitor ask for help.
Stacie: Can Nathan send us last year’s survey for our monitoring reports?
Julie: Are you willing to try quarterly board socials and take turns cooking for each other?
[There is an air of agreement]
4.4 GP7 - Read and sign COI form (current version)
Janie: The Conflict of Interest form was distributed. If you have a conflict, sign this and give it to Julie tonight.
Dina: Is that the best way to handle it? Shouldn’t you sign if you don’t have a conflict as well?
Julie: In this case what you’re disclosing is a material financial interest. Previously counsel has said that being an employee is not a material financial interest, so traditionally I haven’t signed a form. If I hear something different, I’ll sign.
Sarah: I teach classes for the Co-op sometimes, but I’m not an employee of the Co-op.
4.6 BGM4 - GM review report and recommendation
Stacie: The General Manager Review was presented on July 27th. There were three recommendations: 1. I suggested we strike “use the minutes to review the GM.”
Julie: Do we want to preclude using meeting minutes?
Janie: How about “the board may use”?
Desmond: What do you mean GM survey?
Steve: Maybe it should be board member survey and interview.
Dina: On B, have we done this [use an outside resource]?
Stacie: No.
Steve: I think we should leave it in. I don’t think we’ve needed it.
Stacie: My third recommendation is using another way to assess.
Dina: Who would the third party be?
Stacie: CDS
Eric: You already use outside resources when you use the CPA.
Stacie: If people want a task force, we could speak online and charter it next month.
Julie: Staff surveys could be a great tool. I’m wary of the board doing a random staff survey without rational questions and a plan of what to do afterwards.
Eric: You want to be careful too that you don’t produce a chilling effect on employees. When directors ask questions, staff can get worried about why questions are being asked.
5.1 Intro to Linkage and discussion of task force
Julie: For the new directors, linkage is one of our most important jobs: directors talking to members to see what they want us to do. The biggest challenge with us for linkage is what we do with the information we get from members. What we did last year was just piggyback on what I do with my paid job.
5.2 June/July linkage events discussion
Dina: Saturday August 20th from 1 to 4 is a birthday party for our teaching kitchen, which is turning three. We’ll be collecting school supplies.
Julie: We’re beginning a relationship with Willit elementary.
Stacie: I have a question about the task force. Are you going to have a task force meeting to discuss what we learn and plan how we can interact better with members?
Dina: Yes.
Steve: I think there is value in directors talking to members. I think there is value to members having directors ask them questions.
Lucas: I had not seen the specific report that Julie prepared. I’m very excited to see the Co-op’s Fortieth anniversary on this report – I would like to request that every event reflect the Coop’s 40th. The UN has just declared 2012 the International Year of the Co-op. We should be taking the lead on that. I think that we should absolutely be all over this – including working with the city. We have a real opportunity to educate the populous.
5.3 Review member surveys from annual meeting
Stacie: During the annual meeting, we asked members questions and these are their responses. We want to do something with these responses. We thought these would be good for writing articles for the Vine. I’d love to hear any thoughts about this.
Julie: I’m glad to see these come back. Whether we use them in the newsletter, I’d like us to have some reaction.
Dina: I noticed a couple places where information was being requested and I thought an information desk was a really good idea and maybe a great job for a superworker.
Steve: One of the ways we distinguish ourselves: service and education.
Janie: I think we should publish this in bullet point format, and say we will be following up with another article. I think it would be interesting to members.
Julie: It seems a little bald to just publish.
Stacie: I’m nervous just to publish this from the board. Do you just want to publish this in the Vine?
Desmond: I think with a short preamble, it would be appropriate to publish.
Steve: We can use this as an opportunity to solicit more feedback.
Julie: I’m going to back Stacie.
Dina: You could use that to encourage people to attend the next annual meeting.
Consent Calendar
Julie: (reviews consent calendar process for new directors)
Presented: Consent Calendar Items Retained by unanimous consent:
6.2 Accept June 6 Minutes and June 20 Minutes
6.3 Monitoring Chart
6.4 Task Force Report compilation
6.5 Board calendar
6.6 Board Member representing the Co-op Report
6.7 Ratify Ground Rules
6.8 GP8 - 1st Reading
Removed by objection: n/a
Motion: Stacie moves to adopt the consent calendar
Julie seconds
Vote: Motion is adopted unanimously.
7.2 Report and update on Member Loan program
Eric: Any questions? The short of it is I was not comfortable writing a prospectus during the first months of Trader Joe’s.
Janie: That makes sense but it is different than what Kenna was saying. He said thought it was a risky time.
Eric: He still thinks that.
Janie: If you can find a professional proofreader, it would be good.
Steve: A prospectus is an outline of risk.
Eric: Therese Tuttle says the sinking fund is an important part of what we present. If we say we’re facing the possibility of using cash, in her opinion the Department of Corporations is not going to see in our favor.
Janie: Isn’t it ironic that you have to have cash reserves when you’re trying to raise cash?
Steve: It seems to me that we do have significant cash reserves that we can point to. A lot of it’s a factor of how much we borrow, under what terms, and for how long. It would be interesting to see what’s out there. I wonder if an additional sinking fund is actually required. We do have to figure out a way to back money.
Eric: Therese said we have to show a plan of how we’d pay this back.
Stacie: I’m just wondering the next step – when the 2011-2012 budget is complete. I assume we’ll have to craft a 10-year budget, and then a prospectus. Is that drafted by you or the task force?
Eric: It would make sense for Kenna to make that. We could have a board member do it, but if Kenna and I are the sales people we have to say that we believe this.
Dina: Is part of the long-term plan to have Therese come talk to the board?
Eric: We could do that. The California Department of Corporations has to approve our right to ask our members for loans. Therese has crafted the applications. We know how to do the process.
Dina: That seems different than whether we should do it.
Eric: Therese can’t answer that question. A CPA could do it. Teresa Castanias could answer that question.
Dina: I would like that.
Eric: From our members’ perspective this is going to be an emotional decision. For the coming year’s bylaw vote, I would really like to see us sell investment shares.
Steve: Eric could you get a copy of the North Coast prospectus to Stacie and I? My understanding of a prospectus is adequately disclosing risk. There are certainly risks, but on the other hand, we are a strong Cooperative.
Ben: It might be worth it for us new board members to get together over a beverage to discuss this.
Eric: Dina you are right as directors to be informed about trading long-term for short-term risk.
Julie: I would be interested in hearing from Teresa Castanias.
Doug: One small thing that I wanted to bring up…one of the things that our members expect the board to do is be intelligently cheap. I think that’s it’s totally reasonable to ask experts, but one thing core members will be interested in is why you’re spending money to research things you’re not going to do.
7.3 Discuss Bylaw language error and proposed letter to members
Doug: First of all, I want to apologize – this should have been part of the packet. When sitting down to type in the new bylaw language, we discovered that there had been a massive clerical error in presenting the bylaw change to members. We ought to inform the members of the error.
Eric: Babak did say he felt “clerical error” was the correct term to describe this. He felt that the intent of the members was to change this.
Doug: All the words that are in the new bylaw were there, but what we were striking out was not accurately portrayed in the ballot.
Dina: The old bylaw language was not correct?
Doug: Yes. The tradition has always been to present a line out and insertion in. Counsel has advised us that we have a threshold for reconsidering this vote. We are proposing to set the threshold at 5% of shareholders in good standing. We also have discretion as to whether to set an immediate election or wait until next spring. If protests reach a certain level, the board will take action. The likely cost is going to be around $3,300 dollars for the mailing. I just want to point out the last paragraph says this is not the way we like to run our elections and we hope to avoid this next year.
Janie: I think that we as a board are culpable. We ought to a have a policy that all amendments are read by a professional proofreader.
Eric: We want to ensure that you are comfortable with 5% as the threshold.
Desmond: This would be 5% percent who have a problem with this.
Stacie: So, if I didn’t vote and I have a problem with this, I could recall it?
Yes.
Steve: We’ve used 5% in other places: that’s 500 people; we’ll never see that. If we see 1% we should do something about it.
Steve: I think management is right in picking 5%.
Janie: Do people have strong feelings about this?
Eric: This is the safest thing to do.
7.4 Audit Task Force
Steve: This is the audit task force. Stacie raised an excellent question.
Stacie: Did you find the clause that authorizes the task force to hire outside consultants?
Julie points to a section she believes authorizes the task force to hire consultants.
Stacie: I don’t want to have a long discussion about this, but I want to make sure we aren’t crossing some disinterested task force lines.
Eric: I’m very comfortable with the audit task force.
Julie: It would probably be tidier to amend your task force.
7.5 Closed Session
Julie moves to adjourn to closed session at 10:20
Janie seconds
Motion passes unanimously.
At the request of the General Manager,
Stacie moves to postpone the base annual salary adjustments (6C) until the start of the fiscal year 2012 according to the terms of the Employement Agreement with the General Manager June 2009-2012.
Steve Seconds
In Favor: Janie, Travis, Stacie, Desmond, Ben, Steve, Frank, Dina
Abstaining: Julie
Motion carries
Meeting Evaluation
Steve: Thanks to Eric and Doug.
What Went Well?
Upgrades
Next Meeting –
Facilitator: Janie
Time Keeper: Julie
Recorder:
There being no further business to come before the meeting, it was adjourned at 10:18 p.m. by a motion made by Julie, seconded by Jane, and passed unanimously.
The closed session was adjourned at p.m.
/s/ Julie Cross, Secretary
__________________________________ ______________________
Secretary, Davis Food Cooperative, Inc. Date Approved