DAVIS FOOD COOPERATIVE, INC.

BOARD OF DIRECTORS

MEETING MINUTES

January 24, 2011

Call to Order

The regular monthly meeting was called to order at 7:00 at the Davis Food Co-op Teaching Kitchen Conference Room, 537 G Street, Davis, California, by Julie Cross.

Roll Call:

Directors Present: Janie Booth, Julie Cross, Theodora Consolacion, Stacie Hartung-Frerichs, Desmond Jolly, Steve Reynolds, Kevin Wolf, Frank Fox, Rebecca Hager, Dina Biscotti, Sam Citron (arrived 7:08)

Directors Absent:

Staff Present: Kenna Krueger, Doug Walter, Beth Tausczik

Guests Present: None

Roles:

Facilitator: Julie Cross

Time Keeper: Desmond Jolly

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:

none

Review Ground Rules: read by Nathan

Announcements:

Teddy: Jack will be more than happy to speak to members when the time comes to discuss member loans.

Janie: Eric is sick tonight and will not be here. He said we could call him if we need to. But I think we should not call him, so he can rest.

Stacie: There was a task force meeting of the Ends task force; I’ll be sending those minutes out with a request for a future meeting.

Q&A:

Steve: It sounds like sales aren’t down as much as we feared.

Beth: It seems like that right now.

Kenna: Just to backtrack a bit, Trader Joe’s opened around Nov 1^st; we tracked our sales before the students went on break. We had declines of 10% to 12%. We expected to pick up during Christmas time when the students were away. And indeed our sales declines were down to 5% to 6%. The first week in January we were down 4.2%, then 1%, then 5%. We still need some more data, but that’s really positive for us. We were down about 120 to 130 shoppers a day during the first six weeks of Trader Joe’s; now, we’re down about 50. That’s good news. We’re still cutting expenses.

Beth: A couple of other notes; we’re using a new management team meeting format; we’re retraining staff again (customer service, brand training, and another round of customer service). If each member of staff can sell $2 more a day, we’ll break even. In looking for things to cut, we’re looking for things behind the scenes first – things that don’t depress staff morale.

Stacie: How is the 401k match affecting staff?

Beth: It’s off the table for this year. I have not heard any real complaints about that. I think that what I’m hearing from staff is that people are concerned about their hours and their health coverage. We have a pretty young staff with young families.

Kevin: I read Eric’s review of Trader Joe’s; I think he pulled a punch in not mentioning anything negative about Trader Joe’s shipping goods to Monrovia first before distributing them.

Beth: It’s a marketing strategy. We don’t want to appear whiny. We want to appear value based and focused on our community values.

Kevin: Can we as directors publicly comment on this, or should we check with management first?

Desmond: I would think Kevin that there’s nothing to prevent you as an individual. You’re a shopper and you’re a member of the Co-op.

Janie: I think it would be hard for us to take a stance as a board, but if you want to write something in Choices, you can do that as yourself.

Julie: To sign it as board members, we’d have to take a board action. Doing anything other than through the strictest channels would be a poor choice.

Desmond: Beth said that if each staff member could sell $2 more per shift, it would be a good thing. I think if every shopper would spend 3 or 4 more dollars that would help as well. I think that’s an appeal that could be made to our members.

Steve: I agree with management. Let’s not slam the competition; let’s say we do our business locally. Savemart is also getting a better portion of Davis shoppers. We’re doing pretty well and addressing the reduced Market Share.

Sam: We shouldn’t be too worried at this point. Unless there’s something I’m not aware of.

Stacie: Kenna those were year over year numbers correct?

Kenna: Yes.

Audit report

Steve: The short and sweet. We got a clean audit report. There were no big problems. We decided to do an audit instead of a review this year, because we have a new point of sale system.

Dina: Kenna, you thought we’d need a year before we could decide on the member loan process.

Kenna: When we’re facing severe competition and our future is uncertain, it makes no sense to trade long-term debt for short-term debt.

Kevin: Can you give us a history of when competition changes come in (Target, etc.)?

Julie: I think we should ask Eric to do that for us instead of trying to ballpark it right now.

Sam: We won’t have to wait another full year to find out if we rectified the concerns of Gilbert?

Steve: They were rectified as they were identified.

Kenna: You all received an email from Eric concerning a plan of action? No? There’s an email forthcoming.

Beth: I think as I was leaving for the NCGA meeting he was finalizing it.

Janie: I want to thank the audit task force for all their work. It would be nice to have seen an audit task force report. Then we wouldn’t have to hash this all out now.

Steve: I was really impressed with management’s non-defensiveness and responsiveness.

Dina: We found out that there was a new interview approach. Some of the issues of best practices not being met came out through the interviews.

Agenda Review

Amend Agenda by remove 4.1 GP6 and 4.3 GP7 add 7.1 Board Responsibilities

Stacie moves to adopt agenda as amended

Sam seconds.

Motion passes unanimously

4.2 GP2 - Board Job Descriptions

Discussion:

Desmond: The responses were quite high: 4s, 5s, and a few 3s. All of the averages, in terms of approval were above 4. In any case, I am reporting that compliance was achieved for GP2 section 1 through 4. There was an observation that the board could do more in terms of member linkage; there were also concerns about the legal meaning of the term “assurance.” I’m recommending that we accept this report. If we find that concerns about “assurance” are significant, we can change it.

Janie: How do people feel about revising policies for one ambiguous word?

Julie: I think if it’s a simple change, we could put it on the consent calendar and waive the first two readings.

Sam: Sometimes I will read word changes and not be sure if it’s simply a cosmetic change or if there is something substantive change. There should be some disclosure of intent.

Motion: Janie moved to accept the report

Stacie seconded

Motion carried unanimously

4.4 GP5 -Board Task Force Principals

Discussion:

Kevin: There is one section that we failed in. All task forces do not have at least one non-director member. We could either, change the requirement to a recommendation or make the requirement more stringent. I’d propose a change to making this a recommendation instead of a requirement.

Dina: So, we don’t publicize in the newsletter that we’re searching for members to serve on task forces?

Julie: I do new member trainings and tell members how they can serve on task forces.

Dina: I didn’t attend a new member orientation, but I’d have volunteered if I’d seen it in the newsletter.

Stacie: Last year, we said we were fine with non-compliance, because this was a goal. I don’t know if people still feel this way. Do we want to advertise more broadly?

Julie: I’m fine with it not being a requirement, I’m fine with making it a requirement that we try, I’m fine with advertising in the newsletter, I’m not comfortable with writing a policy that we’re never going to be in compliance with.

Doug: The newsletter wouldn’t be useful, given the advanced deadlines, for advertising specific meeting times.

Steve: I think we should keep it as a goal. Sometimes we aren’t going to meet it.

Desmond: Are you supporting Kevin’s proposal?

Steve: I’m fine with leaving it the way it is.

Sam: To the extent that it’s important to us to get people to join task forces, we should ask ourselves, “how are we advertising it, and what incentives are we providing?” We could provide food, or resume fodder.

Stacie: If you rewrote it, I’m not going to be adamantly opposed to it.

Motion: Janie moved to accept the report

Sam seconded

Motion carried unanimously

4.5 B4 -Annual Review and 4th Quarter Financials

Discussion:

Kenna: You have the report in front of you; I’m happy to answer your questions.

Janie: If you have questions that Kenna cannot or does not feel comfortable answering, I’ll compile a list for Eric.

Desmond: Has there been any review of our advertising to see how effective it is?

Kenna: That would be a question for Eric.

Dina: I understand our compressors were down for a while; can some of that money be recouped?

Kenna: We’re still trying to understand the effect of the renovation on our energy cost. We have the Protocol Compressor system; it’s so much more energy efficient than our old system, but we’ve been running a lot more equipment.

Beth: It’s been difficult; there’s been a reduction in capacity from the solar system. We’ve been working on that. We still don’t have a total answer. We’re a bit baffled about exactly what’s going on. It seems we’re having a decrease in effectiveness.

Kevin: I assume you have a meter to track your efficiency? It would be interesting to see how much energy we’re using in the store.

Stacie: I was also thinking, wasn’t Eric supposed to add a report about the benefits change? I didn’t know how that fit into this?

Kenna: Which benefit change are you referring to? There weren’t any changes for this fiscal year. (401K changes are in next fiscal year.)

Julie: Do you want to accept this report?

Motion: Desmond moves to accept the report

Rebecca seconded

In favor: Julie, Janie, Steve, Dina, Rebecca, Stacie, Teddy, Desmond

Abstained: Sam

4.6 BGM3 - 2nd Reading

Discussion:

Kevin: Julie wrote some comments on the board website. Her wordsmithing of it seemed fine. Should we clarify that Ends interpretations and metrics should be listed here? As I understood it from the last GM performance evaluation, if something wasn’t here, we couldn’t bring it under consideration. The benchmark and achievements are different.

Janie: I like the other changes that Julie made.

Kevin: I’m fine with that. I’d like to omit the last sentence of the opening paragraph. I think I could take this and redo it as a third reading. If there are any edit changes we could make those.

Janie: Send it out early.

4.7 B4 - 2nd Reading

Discussion:

Janie: A5 and A6 are where the changes occur.

Kenna: It’s in the best interest of the Co-op to make a patronage refund decision in October. In our review Gilbert always asks for that language. This has income tax repercussions. I think you have to strive to make that decision by November.

Stacie: Maybe we should bring this back as a 2^nd reading again.

3.1 Discussion of Board budget

Discussion:

Julie: You’ve all heard about our financial situation by this point. Is the board willing to restrain their budget? In particular attending CCMA and attending board dinners. I propose we don’t spend any money except for the annual membership meeting.

Teddy: So, my first question is does that include consultants like Babak?

Kenna: That expense always appeared in legal expenses. It does not appear in the board budget.

Desmond: Before the retreat each spring, you’ve had a dinner. Does your motion propose that the directors pay for that themselves?

Julie: My motion proposes that the board budget not pay for that.

Janie: I think that completely cutting out CCMA affects not only us but also other people who are there. It would be a disservice if no one from our Co-op attended the meeting.

Kevin: I think we, as a board, should be investing in ourselves. We need training. It’s not a symbolic thing that isn’t going to make much of a difference. This minor amount to have us trained should not be cut.

Sam: I cannot support any changes without a comprehensive review of what we are spending on each item and what its benefits are.

Stacie: My first thought was I was not thrilled with how you measured it. I think it’s appropriate to reduce our costs. I’d like to keep training in to some extent. I’d really like the $500 for the metrics, but I’m happy to cut going to CCMA.

Kenna: This is a time for us to really be frugal. We are not giving raises to any staff member this year. If things improve greatly, maybe we’ll change the way we look at things. We’re cutting wherever we can, in places that will not affect our service level, sales, or staffing decisions.

Steve: I think particularly in hard times, we cannot afford to be less effective as a board. I think we need to reduce costs with a scalpel. We’re only effective with training. There’re things we can cut, but we need to remain effective.

Julie: It’s difficult for me to tell someone making 8.50 an hour they won’t be getting a raise this year, and then have them see board members get free meals. It’s hard for me to support sending directors to CCMA when we can’t send staff to meetings.

Sam: We’re not even being paid 8.50 an hour. With the only perk for sitting on this board being a dinner, it’s not that much of a perk. I would say that I am more than willing to match any percent cut that you are doing on your side. Whether it’s 10%, 15% or 20%. I think we are a fairly thrifty board.

Desmond: There are boards that live lavishly: they have hotel rooms and airplane flights. I haven’t perceived this board to be living lavishly. I think some people should go the San Diego meeting. I learned a lot going to that meeting in Reno. If we start seeing the board as inessential, I think you’ll regret it. The board morale will slip.

Teddy: I guess my concern is that yes we do have a problem with our loss in sales, and it’s really hard economic time. Severe cuts cut into the fiduciary responsibilities of the board. I think a little bit of access is important, especially for newer members.

Beth: Indeed one of the most important things for our buyers is to go to trade shows, and we are severely limiting that. I don’t think that we have taken as much advantage of some of things that have been offered through say CGIN. I suggest pursuing those options instead of CCMA. There may be ways to get training through NCGA. There may be other less expensive ways to provide training.

Dina: I would think it would be helpful to see the current board budget and how we’re doing in terms of expenditures.

Steve: I don’t think that governance is a luxury. Can we trim? Absolutely. We should be mindful of the costs of training and we should explore some of the options Beth mentioned.

Kevin: I’m fine with cutting out food. It may not be expensive, but it’s symbolic. It shows we are willing to reduce our costs. I don’t think we should reduce training.

Doug: Does the board have 10,000 dollars in its budget for training? Your participation yields you a discount on your groceries.

Sam: You’re saying that there’s been an 85% reduction of staff training?

Kenna: The training budge has been reduced from $20,000 to $4,000.

Doug: We looked at whether we could do no training, but we were contractually obligated to do some training. We have chosen not going to trade shows, which would normally offer us some buying discounts.

Sam: You feel that trade shows aren’t important for staff training?

Doug: No we felt that desperate times, call for desperate measures.

Sam: I’m surprised that staff trainings are considered such a luxury.

Beth: We feel that training is very important; we thought that given this year we would look for other means of training. We’re relying on our reputation to bring trade shows to us. We’re doing that out of the hours that we spend in store. Working harder.

Sam: Are trade shows a huge proportion of staff training?

Julie moves “resolved, that the board will not authorize and Board expenditure, including but not limited to meals, conference costs or consultant fees, until the Davis Food Co-op has had three months of flat or positive sales.

Further resolved that the Annual Membership Meeting expenses are not covered by this resolution, and the Annual Meeting Task Force is directed to continue the planning process.

Motion dies for lack of a second

Motion failed

Stacie: moves to reduce board budget by meals, printed materials, and reference books immediately, and that we bring a revised budget for conferences, and all other categories.

Rebecca seconds

Sam moves to table the motion

Desmond seconds

All in favor Julie, Sam, Dina, Janie, Desmond, and Teddy

Opposed Stacie, Rebecca, and Steve.

Motion is tabled.

Janie: what does printed materials include?

Sam: I think it’s dangerous to exclude categories. I think we should strive for a percentage. I think we should make a reasonable cut.

Stacie: The key is that we are going to work over email to make reasonable cuts.

Desmond: I had a suggestion that the board sets up some mechanism to determine how to set priorities in terms of budget and bring that back to the board.

Kenna: Most of your board budget is CCMA, probably 85% and if you have a retreat with an outside facilitator.

Stacie: CCMA is roughly 40% of the budget.

Janie: We never use our entire CCMA budget.

Dina: I wanted to support something Steve said; I think you want to keep investing in the training of the board. I wonder if other folks in the store felt this way.

Janie: If staff wants to run for the board to get free meals, they can run for the board.

Beth: I would like to point out that there might be other viable opportunities for board training that would be less expensive than CCMA.

Rebecca: Obviously training is important. I think it would be nice to cut things we don’t need or don’t use and that we will come up with meaningful cuts without eliminating all training.

Dina: It’s challenging to lead in a time when you aren’t flush with cash. It’s a surprise to me that people are upset that board members are getting free meals.

Kenna: I don’t think people care about that.

3.2 Charter March Retreat Task Force

Discussion:

Julie: Who wants to chair the retreat task force?

Janie: I will.

Julie: We will change the name to March Board Working Group Task Force.

Motion: Stacie moves to adopt task force as amended

Julie seconded

Motion carried unanimously

Janie: Do people want the Friday night dinner?

Dina: Yes, and we could have a potluck.

4.8 Break at 8:30 resume 8:45

4.9 Proposed Bylaw change language (draft)

Discussion:

Steve: I would like to suggest that given that our December minutes said, “Let’s just do the clean up language,” that we look at the first option, which is the clean up. Paragraphs F and G have some nice savings language. I think it’s important that we aren’t depriving ourselves of our rights to govern, nor are we depriving our members the rights they are granted under California law. I like this language because we don’t know what the next boycott will be.

Stacie: Thank you for getting this, and thanks for getting an attorney to do this. I think we should set up folders in our board website by meeting. My other comment is that this language says that we have six months to put language on the ballot. I didn’t remember deciding that it should be six months. I thought we talked about making it a year or the next upcoming ballot. I wasn’t sure if we were voting on whether we wanted intermediate or current.

Steve: We’re looking at current language plus clean up.

Kevin: I’d like to point your attention to section E. I’d like to delete number 1 completely – a strict reading of that says, “You cannot run a boycott.” I think we’re missing a definition of “disruption.” So, I’d like to put the word “significant” in front of “disruption.” And the same thing in number six – “significant member loss.” It needs a modifier.

Desmond: I’m wondering if E6 is not redundant and already subsumed in 5.

Dina: Everything in italics is new?

Julie: Yes.

Dina: I’m wondering if we can change the wording of the last sentence in D3.

Julie: The old language says that if we get a petition and accept it, it will go on the ballot in six months. Dina, you made the motion, did you mean to maintain the current standard.

Dina: It didn’t cross my mind; it would be good to put it on the next upcoming ballot.

Steve: A special election is not the end of the world.

Doug: It’s about $2,000-$3,000 direct expense, excluding labor expenses.

Steve: I’m wondering if we can’t get to a decision about adding that language, and Kevin’s suggestions are fairly small. I would like to see us vote on these suggested changes, get these changes, and put this on the consent agenda for next month.

Julie: Are there any process comments?

Stacie: I would like to not see it on the consent calendar.

Julie: We will go through the changes one at a time?

Desmond: That will be vetted by Babak?

Julie: Yes.

Julie: Stacie what did you want to say about the change in paragraph B?

Stacie: There’s nothing to say that if we get the petition late, that we don’t have to rush it onto the ballot.

Steve: The board could retain its discretion to hold a special election.

Rebecca: Does it have to be a 12-month wait; can it be 14 months?

Janie: That might look like we’re stalling a bit.

Desmond: We could have a provision that if the final submission doesn’t meet a specific timeline – x days before the election – the board retains the right to defer the measure until the next election.

Steve: I favor adding some language about the board retaining the right to call a special election. Most advocates of an initiative want to get it on the general election.

Julie: So we add a bit about being in accordance with “the election calendar” and change six months to “12 months.”

Desmond: E6 and E5 seem redundant to me.

Janie: One is about being disruptive and one is about being divisive.

Desmond: Number 5 is more defensible than 6.

Steve: I could live with eliminating 6.

Julie: If we had ten people come in and resign, we could in fact tell you how much we just lost in sales. So, we’re eliminating 6 and adding the word “significant” to 5.

Kevin: I’m concerned that E1 doesn’t allow for any boycott.

Sam: I’m opposed to any changes.

Steve: I think Babak is being careful here.

Kevin: I think that people could use number 1 to argue that we could stop any boycott any time.

Stacie: I don’t understand how different 1 is from F, because F says basically the same thing.

Doug: I think Sam had a good point. You can decide you want to cut these, but I think you go back and ask Babak why it might be important to keep this.

Dina: I’m interested in adding the word “cooperative” before “corporation.”

Kevin: Can we extend the period before you can accept signatures after a failed petition from 6 months to 12 months?

Kevin: We’re going to be voting on changes to the bylaw about boycott, I think we should change the bylaws regarding the member meeting. A small number of members can affect change at this meeting if they gather a quorum. We had a member meeting in 1983 where we voted down moving into a new store. The danger of getting to 250 people in a meeting is that it becomes not as difficult to affect policy.

Sam: It’s not that easy to hijack the meeting. Notice must be provided beforehand, which would draw the opposition, who could then vote it down. It would be appropriate for Kevin as a board member to express his concern directly to Babak.

Julie reads back desired changes.

Janie: I’d like to know his rate and how much we’ve spent on this?

Stacie: I was thinking of process and procedure. There will be an ability to write a “for or against” opinion. The way it works, unless I’m wrong is that the first written is the one that gets in.

5.1 December linkage event discussion

Discussion:

Julie: Steve and Frank were at the Holiday Meal.

Steve: It was great. I recommend it. I stood out front and welcomed people.

Frank: A couple of people from out of town were there.

Julie: We served 538 meals.

Steve: We prepped for 800 and it all goes to the shelter.

Stacie: It’s a great event; you find yourself sitting next to people you might not otherwise.

Julie: The year we had both a fire and a heart attack, Lucas called 911. The next linkage opportunity is the Souper Bowl.

Consent Calendar

Retained by unanimous consent:

6.1 Motion: Adopt consent calendar:

6.2 Motion: Excuse Stacie's absence from December meeting

6.3 Accept December Meeting Minutes

6.4 Monitoring Chart

6.5 Task Force Report

6.7 Board Member representing the Co-op Report (events, electeds, service providers, vendors with whom you meet in the role of Director)

Removed by objection

:6.6 Board calendar

6.8 Revised administrative policy regarding attendance by telephone

6.9 Global GP - 3rd Reading

Motion: Dina moves to adopt the consent calendar as amended

Steve seconds

Vote: Motion is adopted unanimously.

7.1 Additions from consent calendar

Janie: I want to have a discussion about our board responsibilities. We need to have directors complete the surveys, we need task force reports, and we need packet items on time. I don’t know the best way to get this done. We just need to step it up. We could try a carrot and offer incentives; we could try a stick and take away super worker credit.

Stacie: One issue with the surveys is that I’m not sure which ones to fill out and when. It would be nice if they had a due date.

Dina: I have been occasionally confused if I’ve completed the survey or not.

Steve: Maybe we can ask Nathan to send out a gentle reminder to people who haven’t completed the survey?

Stacie: As a person who wrote a report, I don’t have access to see who completed the survey.

Steve: I think it’s a relatively nominal cost.

Rebecca: My only thing is that I can’t access them. If it can be emailed to me in text form, that would work better.

Teddy: Is there a way to make it regular; like every 15^th we know we need to fill out the survey.

Frank: I think it would be good if you could alert us at a meeting what surveys are coming up next time.

Janie: Task force reports? We just have to work harder on that one. Having a meeting is not good enough. If you don’t submit a report, the board doesn’t know what you’re doing.

Stacie: Maybe we could add to our policies that we have to send out reports.

Janie: The last thing was getting packet items in.

7.2 Board Calendar

Julie: The date of the retreat on the board calendar is wrong. The retreat is March 12^th.

7.3 Revised Admin Policy

Kevin: If you read in section C, “only one director may attend [via phone].” Here’s the thing: I’ve missed two meetings. So, if someone signs up for the phone first, I’m off the board.

Dina: I think if we used our phone to call out to a conference call, we can support multiple callers.

Stacie: This whole “noon,” does this give you enough time?

Janie: I think this assumes that if you try, you’ll get excused.

7.4 Global GP 3^rd Reading

Dina: I wanted to change C to “ensure”

Julie: Does anyone object to adopting this with that change?

Motion: Sam moves to adopt policy as amended

Rebeca seconded

Motion carried unanimously

Meeting Evaluation

What Went Well?

Julie: I like that we got somewhere on the bylaws.

Janie: I like that we can get in very heated discussions, but it’s because we all care about the Co-op.

Julie: I dislike that I lost my temper a little bit.

Desmond: I like that Janie was frank about our shortcomings.

Janie: I like that everyone’s here for our meeting.

Upgrades

Next Meeting –

Facilitator: Janie

Time Keeper: Desmond

Recorder: Nathan

There being no further business to come before the meeting, it was adjourned at 9:53 p.m. by a motion made by Janie, seconded by Rebecca, and passed unanimously.

/s/ Julie Cross, Secretary

__________________________________ ______________________

Secretary, Davis Food Cooperative, Inc. Date Approved