Thursday, April 26, 2012

Mountain Equipment Co-op AGM: Democracy slipping away @MEC

Democracy took another hit at Mountain Equipment Co-op's Annual General Meeting yesterday. Intentionally or not, MEC's board has deceived MEC members into voting for a resolution that shifts power from the members to the board. This is bad governance, harmful to the members, and harmful to MEC.

The board proposed a Special Resolution, and approved the following description of it in the election booklet mailed to every member:
"Specifically, the changes would place responsibility on the Committee for identifying and presenting a qualified, diverse ballot of candidates to the membership each year. In essence, the changes result in:
  • Better communicating board skill and knowledge needs so we can clearly identify qualified candidates and inform members of the same;
  • Ensuring we present a qualified and balanced election ballot each year so members have a positive voting experience;"
[full text here]

Whether by intention or by accident, the above language is deceptive. It does not make clear what power we members would give up if we approve the resolution. Most MEC voters wouldn't have taken the time to click through the two levels on MEC's website to read the actual text of the resolution. Those few of us who did found this passage:

"... the nominations committee will select those nominees who meet the desired qualifications, experience and other attributes for directors, and decline any nominations for nominees who do not meet the desired qualifications, experience and other attributes for directors, as per its authority set out in the Rules and Board policy." [full text here]

This gives the board-selected nominations committee the power to exclude any member-nominated candidate from the election ballot, based on their subjective interpretation of the board-defined desired attributes. For example, the board might desire an attribute of collegiality, and criticism of the board's policies might be interpreted as a lack of collegiality.

The resolution would shift substantial power to nominate, from members to the board and its appointees. This is not clear from the booklet description.

There is no online forum on the MEC website where members can discuss election issues with each other. Had there been one, we could have alerted fellow members to the above deception. The two other resolutions that were presented in person at the AGM, had open pro-and-con discussions before a vote was taken. Most members who unwittingly gave up our nomination rights via the Special Resolution saw only the board-approved positive spin.

The board members seem like nice people, and perhaps they sincerely believe that shifting power from members to themselves by whatever means necessary is good for MEC. Of course, if this concentrated power is not abused, things could work OK. But it's bad governance to depend on the good will of a small group of people with insufficient checks and balances on their power. The freedom to nominate members who disagree with the incumbent board is our primary check and balance, which we are now giving up. We have allowed our board to entrench itself.

The Special Resolution vote counts:
For: 27,234 91.7%
Against: 2,453 8.3%

The lack of accountability of elected leaders is the main root cause of our recent global financial crisis. (I say this as a specialist in finance and governance -- see my cv here.) So it's ironic that MEC's board chair (at the AGM) and spokesperson (quoted in the Georgia Straight) cited the financial crisis to justify concentrating power in the MEC board, reducing their accountability to members.

It's especially ironic because the governance of corporations is now moving away from board control of the director election ballot, partly as a reaction to the financial crisis. This reform movement is called "proxy access".

As a small step toward democracy, at the AGM I proposed that MEC create a members' online forum, so that we can discuss with each other, topics of our choosing including elections, resolutions, new product suggestions etc.

One of the co-op principles on the MEC website is
"Democratic Member Control
Co-operatives are democratic organizations controlled by their members, who actively participate in setting their policies and making decisions. Men and women serving as elected representatives are accountable to the membership."
Let's walk the talk!

Related links:
Congrats to newly elected MEC directors Carole Dobson, Drew Anderson and Mike Wearing!
(Vote counts here.)

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