Memorandum. Re: Recommendation of the Executive Committee to the Board to adopt the recommendations of the Ad Hoc Governance Committee

Transcription

1 Memorandum From: Executive Committee To: Board Re: Recommendation of the Executive Committee to the Board to adopt the recommendations of the Ad Hoc Governance Committee Date: 5/13/13 At the April Executive Committee meeting it was agreed that an ad hoc Governance Committee comprised of Jim Wheeler, Jay Freedman, and Joe Sternlieb would meet to review the By-Laws, Policies and Procedures and Articles of Incorporation to: 1) Ensure that they are in compliance with the District amended non-profit laws; and 2) Review for practical amendments to make the work of the organization more efficient and effective. The Governance Committee met on Wednesday, May 1 st and reviewed technical amendments to the Articles of Incorporation and By-laws recommended by outside Counsel, Andrea Ferster Esq.; and also discussed a number of practical updates to the organization s bylaws and policies and procedures. The Executive Committee met on May 9 th to review the recommendations and made one small change to its recommendation to the full Board of Directors. The Executive Committee recommends that the Board of Directors adopts the recommendations of the Governance Committee as amended. For ease of discussion, the areas of this memo that are highlighted in grayscale are recommendations of the Governance and Executive Committees. All others are technical legal changes recommended by Counsel. It is recommended that the Board adopt the items in grayscale individually, and the technical changes in block: 1) BID Articles of Incorporation - Amend the Articles of Incorporation to allow for two classes of Directors (as is the current practice of the organization as outlined in the By-Laws). This action would simply align the Articles with the By-Laws. The recommended change to the Articles of Incorporation is highlighted below and require a vote of the Board and the Membership (Annual Meeting): FIFTH: The Corporation shall have Members but shall have no capital stock. The Members shall consist of each Owner and each Commercial Tenant (as such terms are defined in Section 2 of the Act) in the BID area, and such other persons as become Members pursuant to section 21 of the Act. There shall be only one class of Members of the Corporation. The designation of

2 each class of Members, the qualifications and rights of the Members of each class, and any other qualifications and rights of the Corporation s Members shall be provided in the Bylaws of the Corporation. Each Member shall have the right to vote the number of votes allocated to such Member by the formula set forth in the bylaws, on all matters on which a vote of the Members is required. 2) BID Policies and Procedures - Amend the Georgetown BID Policies and Procedures as follows (these changes can be made by the Board of Directors and do not require a vote of the membership): The Governance Committee recommends a number of amendments to the BID s policies and Procedures to ensure the smooth functioning of the organization including: (a) (b) (c) (d) (e) (f) (g) (h) (i) amending the Annual Meeting provision to require an Organizational Meeting of the BOD to elect officers immediately following the Annual Meeting; removing the requirement for signatures to be gathered to be nominated for the Board of Directors. Specifies how meetings of the organization shall be conducted first by consensus and then by Roberts Rules, as necessary. Imposing a schedule on the Nominating Committee Defining rules by which meetings will be conducted. Amending the annual budget process to complete the budget prior to the Annual Meeting (before the new Board and Officers are elected). Reducing the number of Executive Committee positions that can be controlled by a single entity from two to one. Defining the maximum amount that the Executive Committee can allocate, or reallocate in the budget to $25,000. Adds CEO to all references to Executive Director. 3) BID By-Laws - Adopt the technical amendments to the By-Laws as drafted by outside Counsel (Andrea Ferster Esq.) to comply with the District s Amended non-profit laws. Specifically all letter subsections below that are not highlighted in grey: a. 3.02(b)- add the words: who elect to become members under Section 21 of the BID Act. b. 3.06(b) add a new section that states: (b) Record date. No more than 70 days prior to providing notice to members of any meeting of the membership, the Secretary shall prepare a current alphabetical list of all members who are entitled to notice of the meeting, showing the address of and number of votes of each member entitled to cast a vote. Only members listed as entitled to notice shall be entitled to vote at that meeting. The list of members must be available for inspection by any member, beginning two business days after notice of the meeting is given and continuing through until the day of the meeting, at the Corporation s principal office or at a place identified in the meeting notice in the city where the meeting will be held. The list will also be available

3 for inspection by any member at the meeting. A member is entitled to copy the list, during regular business hours and at the member s expense, during the period it is available for inspection. c the language: The then current Robert's Rules of Order or any other rules of procedure acceptable to the Board of Directors shall govern the conduct of all Member Meetings when not in conflict with these Bylaws, the Articles of Incorporation, the Corporation Act or the BID Act. All votes shall be tallied by a person or persons appointed by the Presiding Officer of the Member Meeting. Shall be deleted and moved to a new section 3.16 Conduct of Meetings. To read: Executive Committee, Board, Annual Meetings shall be Chaired by the President or the appropriate Officer in the absence of the President. All meetings shall be open to be observed by Members except when personnel or legal matters are discussed. All meetings will be conducted to allow the Member of the body holding the meeting to fully participate in discussions and decisions. Members and observers attending any BID meeting shall, at all times, conduct themselves in a professional and courteous manner towards one another, and shall refrain from personal or ad hominem arguments. Except where formal votes are required by the BID Act, District non-profit law, or the Bylaws, decisions will be reached by concensus. Where consensus is not reached, the Chair shall employ Roberts Rules of Order to reach a decision. A Chair may also employ Roberts Rules of Order in any BID meeting in order to ensure that the meeting is conducted in a manner that is fair and transparent. d. Amend 3.10 and 3.11 as follows: Inspectors of Election. One or more inspector(s) of election (the Inspectors of Election ) shall be appointed by the Board of Directors prior to the time of any Member Meeting at which Directors shall be elected in accordance with the Policies and ProceduresSection of the Corporation Act Voting. Members shall be entitled to vote on those matters set forth in the Bylaws or on which the BID Act or the Corporation Act requires the approval of the members. The allocation of votes among Members of the Corporation shall be as follows: e (technical change of the section number referred to in the new law). f. 4.01(a) the Committee recommends amending the formula that determines the ratio of Class A (Tenant) members and Class B (Owner) members from 1/3 2/3 at all times, to a formula that provides a permanent majority of at least two three more Class B than Class A members, but in no case shall more than 2/3 of the Members be Class B members. The rationale for this is that the law only requires more owner than tenants

4 serve on the board and that there are times when the BID has the opportunity to bring on very valuable new tenant members who could help the organization, but has been limited in the number of seats available. g. 4.02(a) reduces the minimum number of members of the Nominating Committee from 7 to 3 but leaves the maximum number at 10. There are years when it is hard to find seven members who both qualify and have the time to serve on this committee and it is more work and requires more time to organize the committee than necessary to accomplish the goal just to meet the threshold requirement. h. This section is further amended with the following new (highlighted) language: The Nominating Committee shall make its determinations by majority vote and submit to the entire Board of Directors a written list of the slate and number of candidates for the next Board of Directors; provided that (i) the Executive Committee shall have provided the Nominating Committee with a list of suggested criteria for the slate that seeks to identify Board Members who represent the diverse interests of the Members; the needs of the organization for the coming Board term; members who are committed to fully participating in the activities of the Board and the organization; and (ii) the Nominating Committee shall nominate a slate that does not give undue influence to any Member, in their reasonable discretion. i. 4.02(b) eliminates the requirement that candidates for the Board get signatures to be nominated by the Nominating Committee or to run for election. This requirement appears to be unique to Georgetown BID, and is make-work for members and staff with no real benefit to the organization. The new section would read: (b) Nominations. Each person eligible for election as a Director may be nominated only by: (i) the Nominating Committee or (ii) by a self-nominating Member petition submitted to the Nominating Committee Chair at least thirty (30) days prior to the date of the Member Meeting at which such election shall be held; provided, that, with respect to a Member petition, only Class A Members may nominate Class A Directors and only Class B Members may nominate Class B Directors, and a self-nominating petition shall require the signature of no less than ten (10) Members to nominatea statement of no more than 100 words outlining why the Member wishes to be elected as a Director. Each nominee either shall be present at the Member Meeting for which such election shall be held to consent to the nomination, or shall consent to such nomination by a written instrument delivered to the Secretary at or prior to the time of such Member Meeting. j. 4.02(c) is a technical amendment that reads: In accordance with Section (a-l) of the Corporation Act, in the discretion of the Board of Directors, the election of Directors after the first Annual Meeting may be conducted by mail if the Corporation delivers a ballot to every Member entitled to vote on the matteror in such

5 other manner as the Board of Directors may approve. k. 4.02(d) adds the Embassy Community to the list of qualified Appointed Directors that may serve so long as they are in their official post. l amends the Self Management section of the by-laws to recognize the new title of Chief Executive Officer of the organization s top staff person. The new language reads: (a) Self-Management. (1) The Board of Directors may retain on behalf of the Corporation such individuals as it deems necessary or desirable to assist in the selfmanagement of the Corporation and the BID (the BID Staff ). The head of the BID Staff shall be the executive director of the Corporation (the Executive Director ) or the Chief Executive Officer ( CEO ). The Executive Director shall be the chief executive officer of the Corporation and report to the Board of Directors. The Executive Director or CEO shall, subject to the direction of the Board, (1) be responsible for general supervision of the business and affairs of the Corporation, (2) be responsible for providing broad leadership and direction to the Corporation and (3) establish and maintain management systems needed to ensure and report on the implementation of policies established by the Board of Directors. (2) The Executive Director or CEO, who shall serve at the will of the Board, shall be appointed by a majority of the directors of the Corporation. The Executive Director or CEO may be removed, with or without cause, by a majority of the directors of the Corporation. The Executive Director or CEO shall report to the Board and between Board meetings to the President. (3) The Executive Director or CEO may sign any deeds, mortgages, bonds, contracts, or other instruments that the directors have authorized to be executed, except in cases where the signing and execution thereof shall be expressly delegated by the Board or the Bylaws to some other officer or agent of the Corporation, or shall be required by the law to be otherwise signed or executed. m. 4.07(d)(ii) allows BID Staff or the Managing Agent to accept business related meals and/or event attendance or travel from vendors or contractors in the course of their work so long as the BID is the beneficiary. n Removal of Members of the Board of Directors. adds the sentence (highlighted). The notice of the meeting at which the removal of a director is to be considered must state that one of the purposes of the meeting is to vote on the removal of the director. o adds the phrase (highlighted) Such resignation shall take effect on the date the notice was delivered to the Secretary. Unless otherwise specified in the notice of

6 resignation, Aa resignation need not be accepted in order to be effective. To the section Resignation of Members of the Board of Directors. p is amended as highlighted: Meetings/Actions by Telephone or Similar Communications Equipment (a) Meetings by Telephone. Directors may participate in Board Meetings by means of a conference telephone or similar communication equipment, whereby all Directors participating in the Board Meeting have the opportunity to hear each other at the same time and participate, and participation in any such Board Meeting shall constitute presence in person by such Director at any such Board Meeting. All quorum and voting conditions set forth in these Bylaws shall apply. (b) Meetings by Written Communication. Directors may participate in Board Meetings by means of electronic mail, or by facsimile whereby all Directors participating in the Board Meeting are given no less than seventy-two (72) hours to respond to an electronic mail Board Meeting or facsimile Board Meeting. The notice for such electronic mail Board Meeting or facsimile Board Meeting (the Initial Notice ) shall set forth the time frame within which responses must be received for purposes of (i) determining quorum, and (ii) casting votes. A written response to the Initial Notice shall constitute presence in person by such Director at such Board Meeting. (b) Voting. During a Board Meeting pursuant to Section 4.14(a), the Board of Directors may cast their votes orally. After a Board Meeting ppursuant to Section 4.14(b)9, the Board of Directors may cast their votes by electronic mail or by facsimile provided that such vote is cast pursuant to the time frame specified in the Initial Notice. A written record shall be made of all actions taken at any Board Meeting conducted by means of a conference telephone or similar communications equipment, or by electronic mail or facsimile. All quorum and voting conditions set forth in these Bylaws shall apply. q Conduct of Meetings. Is amended to allow (previously not allowed) Members to duplicate any documents kept in the Minute Book of the organization. This is a technical amendment required by the new non-profit law. r Action Without Board Meeting is amended to allow for the electronic communication of consent of a Board Member under certain circumstances. s. 4.20(a), (b) and (c) is amended as highlighted: Conflicting Interest Transactionsmmon or Interested Directors. Each Director shall exercise his or her powers and duties in good faith and in the best interests of the

7 Corporation and in accordance with the standards of conduct set forth in Section of the Corporation Act. No contract or other transaction between the Corporation and any of its Officers or Directors, or between the Corporation and any corporation, firm or association in which any of the Officers or Directors of the Corporation are Directors or Officers or are pecuniarily or otherwise interested, is or shall be either void or voidable because of such relationship or interest or because any such Officer or Director is present at the Board Meeting or any meeting of a committee thereof which authorizes, approves or ratifies such contract or transaction, or because his or her or their vote(s) is or are counted for such purpose, if any of the conditions specified in any of the following paragraphs exists: (a) the material facts of such relationship or interest and as to the contract or transaction are disclosed or known to the Board of Directors or committee which authorizes, approves or ratifies such contract or transaction in good faith and by a vote of a majority of the directorssufficient for the purpose, without counting the vote(s) of such interested Officers or Directors; or (b) the material facts of such relationship or interest and as to the contract or transaction are disclosed or known to Members holding at least a majority of all of the votes in the Corporation and such Members authorize, approve or ratify such contract or transaction in good faith and by a vote sufficient for the purpose; or t Committees. Is amended as highlighted to comply with the amended non-profit law: (a) The Board of Directors from time to time may appoint (and expand and/or disband) such Board Committees from among its own members as the Board of Directors from time to time deems it desirable to assist in the administration or operation of affairs of the Corporation. The Nominating Committee and the Executive Committee shall be Board Committees, along with such other committees designated as Board Committees as the Board of Directors may create. If required by the Policies and Procedures, the minutes of each Board committee shall be kept in accordance with the Policies and Procedures. No Committee of the Board shall have the power to (1) elect or remove Directors or committee members, (2) approve the dissolution, merger, or reorganization of the Corporation or distribution of its assets; (3) the amendment of the Articles of Incorporation or these Bylaws; or (4) such other matters as the Board may hereinafter determine by a majority vote of the Directors. Each member of a committee shall serve until the next annual meeting of the Board of Directors and until such member s successor is appointed, unless: (A) the committee shall be sooner terminated, (B) such member be removed from such committee, with or without cause, by a vote of the Board of Directors, or (C) such member shall cease to be a Director or otherwise resign from such committee

8 (b) Board Committees exercising authority as provided in these Bylaws, including the Nominating Committee, the Executive Committee, and such other Board Committees as the Board of Directors may create, may have as members only persons who are serving as members of the Board of Directors. Persons who are not members of the Board of Directors may consult with Board Committees and participate in committee discussions as the Board of Directors may direct or permit, but may not vote on Board Committee decisions. (c) The Board of Directors may also create advisory committees and other advisory bodies that provide advice to the Corporation but that exercise no powers of the Board of Directors under the Articles of Incorporation or these Bylaws. Advisory committees, which are not Board Committees, may have such membership as the Board of Directors may determine.; provided, however, that the Board of Directors may not delegate any if its power, authority, or functions to the advisory committee. A majority of the members of an advisory committee shall constitute a quorum for the transaction of business. Each member of an advisory committee shall serve until the next annual meeting of the Board of Directors and until such member s successor is appointed, unless: (1) the advisory committee shall be sooner terminated, (2) such member be removed, with or without cause, by a vote of the Board of Directors, or (3) such member shall otherwise resign from such advisory committee. (d) Any action required or permitted to be taken at a committee meeting may be taken without a meeting, if a unanimous written consent which sets forth the action is signed by each committee member and filed with the minutes of the committee. The members of a Board or advisory committee may conduct any meeting thereof by telephone conference or similar communications equipment. u is amended to read as highlighted as recommended by the governance committee to distribute influence on the Executive Committee among the Board and Membership: (a) Composition; Voting. The Board of Directors shall appoint an executive committee (the Executive Committee ) which shall consist of each of the Officers of the Corporation who is also serving as a member of the Board of Directors, and such other members of the Board of Directors as the Board of Directors may decide., based upon the recommendation of the President of the Corporation. The then current Managing Agent or Executive Director shall participate in the meetings of the Executive Committee but shall not be a member of the Committee. At no time shall any Member be permitted to control directly or indirectly more than two (2)one (1) of the positions on the Executive Committee. u. 4.22(b) is amended to read as highlighted as recommended by the governance committee:

9 (b) Power of Executive Committee. The Executive Committee shall have and may exercise all of the rights, powers and authority of the Board of Directors, except as expressly limited by the Corporation Act, as amended from time to time. Decisions of the Executive Committee shall be consistent with the then current Annual Budget of the Corporation and the Policies and Procedures. Notwithstanding the foregoing, the following actions (the "Full Board Actions") shall require Board approval prior to implementation, in accordance with the timeframes set forth in the Policies and Procedures: (i) hiring or firing of the Managing Agent or Executive Director, (ii) expenditures exceeding the then-current Annual Budget or significant transfers of funds from one category of the Annual Budget to another in excess of $25,000, in accordance with the Policies and Procedures, and (iii) revision of the Policies and Procedures, (iv) actions that are contrary to required undertakings listed in the BIDs 5-Year Plan; Vacancies in the Executive Committee shall be filled by the President of the Board, subject to the approval of the Board of Directors by a vote of a majority of the Directors then in office.. v. 5.01(a) amends the definition of President to remove the title of Chief Executive Officer as highlighted: (a) President. The president (the President ) shall be responsible for the management the chief executive officer of the Corporation and, subject to the direction of the Board of Directors, shall have general charge of the activities, affairs and property of the Corporation and general supervision over its other Officers and agents. w is amended to comply with the new non-profit law as highlighted: Qualifications. Only Directors shall be Officers. Any Officer may hold more than one position, except that the offices of President, Vice President, and TreasurerSecretary shall be held by three (3) different persons. x a new Indemnification section is added to comply with the new non-profit law: 6.04 Indemnification. Section A : Indemnification:. (a) The Corporation shall indemnify any individual who served as an Officer or Director of the Corporation to the extent the Officer or Director was successful, on the merits or otherwise, in the defense of any proceeding to which the Officer or Director was a party because the Officer or Director is or was an Officer or Director of the Corporation against reasonable expenses (including reasonable attorney s fees) incurred by the Officer or Director in connection with the proceeding.

10 (b) Except as otherwise provided in these Bylaws, the Corporation shall, without requiring any further authorization by the Board of Directors, also indemnify an Officer or Director who is a party to a proceeding because he or she is or was an Officer or Director against liability incurred in the proceeding if the individual: (1) Acted in good faith; (2) Reasonably believed: (A) In the case of conduct in an official capacity, that the conduct was in the best interests of the Corporation; and (B) In all other cases, that the individual s conduct was at least not opposed to the best interests of the Corporation; (3) In the case of any criminal proceeding, had no reasonable cause to believe his or her conduct was unlawful; and (4) In the case of an employee benefit plan, reasonably believed such actions to be in the interests of the participants in and the beneficiaries of the plan. (c) The Corporation shall have the right to select attorneys and to approve any legal expenses incurred in connection with any suit, action, or proceeding to which this indemnification applies. Unless the Corporation waives such right, the Corporation shall not be required to indemnify any Director or Officer for expenses of counsel not selected by the Corporation. (d) The termination of a proceeding by judgment, order, settlement, or conviction or upon a plea of no contest or its equivalent is not, in itself, determinative that the Officer or Director did not meet the standard of conduct contained in this Section B. (e) Unless ordered by a court of competent jurisdiction, the Corporation may not indemnify an Officer or Director: (1) In connection with a proceeding by or in the right of the Corporation, except that the Corporation may indemnify the Officer or Director for reasonable expenses (including reasonable attorneys fees) incurred in connection with the proceeding if it is determined that the Officer or Director met the relevant standard of conduct under Section B; or (2) In connection with any proceeding with respect to conduct for which the Officer or Director was adjudged liable on the basis that the Officer or Director received a financial benefit to which the Officer or Director was not entitled, whether or not it involved any action in the individual s official capacity.

11 Section B. Advance for Expenses. The Corporation shall, before final disposition of a proceeding and without requiring any further authorization by the Board of Directors, advance funds to pay for or reimburse the reasonable expenses (including reasonable attorneys fees) incurred by an individual who is a party to a proceeding because he or she was an Officer or Director if the individual delivers to the Corporation (1) a written statement signed by the individual setting forth his or her good faith belief that he or she has met the relevant standard of conduct described in these Bylaws and the Nonprofit Act; and (2) an undertaking in the form of an unlimited general obligation to repay any funds advanced if the individual is not entitled to indemnification under these Bylaws or mandatory indemnification under the Corporation Act. Section C. Determination of Indemnification. (a) The Corporation may not indemnify an Officer or Director under Section A unless the Board of Directors determines, in accordance with Section B, that indemnification of the Officer or Director is permissible because he or she has met the relevant standard of conduct in these Bylaws and the Nonprofit Act, and is not in breach of the BID instruments. (b) The determination shall be made: (1) If there are two or more disinterested Directors, by a majority vote of all the disinterested Directors, a majority of whom will constitute a quorum for that purpose, or by a majority of the members of a committee of two or more disinterested Directors appointed by such a vote; or (2) By special legal counsel: (A) Selected in the manner prescribed in paragraph (1); or (B) If there are fewer than two disinterested Directors, selected by the Board of Directors, in which selection directors who do not qualify as disinterested directors may participate. (c) With respect to any matter disposed of by a settlement or compromise payment by such person, pursuant to a consent decree or otherwise, no indemnification either for said payment or for any other expenses shall be provided unless such settlement or compromise payment is approved by (1) a majority vote of the disinterested Directors, a majority of whom will constitute a quorum for that purpose, (2) by a majority of the members of a committee of two or more disinterested Directors appointed by such a vote; (3) if there are fewer than two disinterested Directors, by the Board, in which case Directors who do not qualify as disinterested Directors may participate; provided that special legal counsel selected in the manner prescribed in Subsection (2)(b), above, determines that indemnification is permissible because the officer or director has met the relevant standard of conduct in the Bylaws and the Nonprofit Code; or (4) by a court of competent jurisdiction.

12 (d) For purposes of this Article, a disinterested Director shall mean a Director who, at the time of a vote referred to in this Article VIII, is not: (1) A party to the proceeding; or (2) An individual having a familial, financial, professional, or employment relationship with the Director whose indemnification or advance for expenses is the subject of the decision being made, which relationship would, in the circumstances, reasonably be expected to exert an influence on the Director s judgment when voting on the decision being made. (e) For purposes of this Article, a Director or Officer shall mean an individual who is or was a Director or Officer of the Corporation or who, while a Director or Officer of the Corporation, is or was serving at the Corporation s request as a Director, Officer, partner, trustee, employee, or agent of another corporation, partnership, joint venture, trust, employee benefit plan, or other entity. Unless the context requires otherwise, an Officer or Director shall also include the estate or personal representative of a Director or Officer. Section D. The indemnification provided by these Bylaws shall not be deemed exclusive of any other rights which are provided under any agreement, vote of the Board of Directors or otherwise. Section E. Every provision of this Article VI is intended to be severable, and if any term or provision is invalid for any reason whatsoever, such invalidity shall not affect the validity of the remainder of this Article VI. x.y Inspection of Books: is amended to comply with the new non-profit law as highlighted (a) Subject to Sections 7.08(b) and (c) of these Bylaws, the books and accounts of the Corporation, together with a current copy of the Articles of Incorporation and these Bylaws, the minutes of all Member Meetings and Board Meetings, and all other records identified in Section (a) of the Corporation Actpertaining to the Corporation, shall be available for examination (but not and duplication) by the Members and contract purchasers and prospective commercial tenants, and/or their duly authorized agents or attorneys, and to the Mayor, the CFO and the District of Columbia Council (the "Council"), and/or their duly authorized agents or attorneys, at convenient hours on business days that shall be set and announced for general knowledge and after reasonable prior written or oral request, and, upon request, any Member, the Mayor, the CFO or the Council shall be provided with a copy of the records of the Corporation. (b) Members and contract purchasers of non-exempt real property and prospective commercial tenants, and/or their duly authorized agents or attorneys, shall be entitled to inspect and copy

13 any of the documents identified in Section (b) of the Corporation Act on working days that shall be set and announced for general knowledge and after reasonable prior written at least five business days before the date on which the member wishes to inspect and copy, provided that the Member s demand is made in good faith and for a proper purpose; the member describes with reasonable particularity the purpose and the records the member desires to inspect; and the records are directly connected with this purpose. The subsequent subparagraphs in this subsection are renumbered. The Executive Committee recommends that those items highlighted in Gray be voted on individually, and all the technical amendments (not highlighted in gray) be voted on in block. The Staff recommends that the Board Adopt these changes with leave for staff to make technical and conforming amendments if necessary.