DAVIS FOOD COOPERATIVE, INC.
BOARD OF DIRECTORS
MEETING MINUTES
April 6, 2009
Call to Order
The regular monthly meeting was called to order at 7:30 at the Davis Food Co-op Conference Room, 620 G Street, Davis, California, by Doreen Pichotti, President.
Roll Call:
Directors Present: Janie Booth, Julie Cross, Stacie Hartung-Frerichs, , Darius Pazirandeh, Doreen Pichotti, Russell Snyder, Michael Ulrich, Kevin Wolf, Jack Young
Directors Absent: Steve Reynolds, Danyal Kasapligil
Staff Present: Kenna Krueger, Doug Walter, Eric Stromberg
Guests Present:
Joan Randall
Roles:
Facilitator: Kevin Wolf
Time Keeper: Stacie Hartung-Frerichs
Notetaker: Luis Sierra
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).
Kevin reviewed Ground Rules.
Member Comments:
None
Announcements:
Julie: Local foods tasting fair on April 26. If board wants member linkage space, you can. It’s from 11-3pm.
Kevin: I’m willing to come, so please save a space.
Consent Calendar
Presented: Consent Calendar Items
Retained by unanimous consent:
2.1.1Accept Election Task Force Charter
2.1.6.Task Force Reports
2.1.7.CCMA Report
2.1.9.Annual Meeting Status
2.1.10.GP9 Trusteeship and Relations to Members – Action Plan and Policy Revision - First Reading
2.1.11.BGM4 Monitoring GM Performance - Policy Revision - First Reading
2.1.13.Board 09-10 Calendar Drafted
Removed by objection:
2.1.2.Accept March 2009 minutes
2.1.3.GM Report – Shopper Survey Results
2.1.4.Motion: Solicit proposal from David Webb to write shopper survey summary article for Choices and Website
2.1.5.Results of Member Capital Survey
2.1.8.Draft Annual Report Comments
2.1.12.Form DFC 201 Task Force and Set Date for Training
2.1.14.Proposal for Sharing Board Information with Members
Motion: To adopt the consent calendar as amended
M/s: Julie/Jack
Vote: Motion is adopted unanimously.
Agenda Review
Amend Agenda by:
2.1.2. Accept March 2009 minutes to 8.1
2.1.3. GM Report – Shopper Survey Results to 4.5
2.1.4. Motion: Solicit proposal from David Webb to write shopper survey summary article for Choices and Website to 8.2
2.1.5. Results of Member Capital Survey to 6.5
2.1.8. Draft Annual Report Comments to 6.3
2.1.12. Form DFC 201 Task Force and Set Date for Training to 7.1
2.1.14.Proposal for Sharing Board Information with Members to 6.4
New business: Motion to accept Election TF changes to Props 4 & 8 to 8.3
New business: Add John Ashby letter to 8.4
Motion: To adopt the agenda as amended
M/s: Julie, Doreen
Motion carried unanimously
Reports
Kevin: How are decisions about using equity to pay off loan vs. put in bank?
Eric: Cash flow strategy: double payments on loans, keep positive cash flow. Long-term plan for renovation (2 loans) was to pay in accelerated form: 30 yr loan paid over 25 yrs. Based on 5% growth per year.
Kevin: How in this investment scenario do you make decisions about sending money to this loan?
Eric: It doesn’t address that. This report is about our investments in other cooperatives.
Janie: Co-op Bank is new.
Eric: Our investment is in non-redeemable shares, which we can’t just sell and ask for our money back.
Darius: Are you asking about whether or not to invest in a CD instead?
Eric: We don’t invest in other businesses as a policy. We don’t have any CDs.
Motion: Accept B5 report as presented
M/S Darius/Stacie
Motion carried unanimously
B6 Asset Protection report:
Stacie: On page 41, FDIC is at a different level now.
Eric: As we reported in a previous report, we need a fairly large flow. Possible, but difficult to manage multiple accounts
Kenna: Our loan agreement with Union, as long as we keep $640K, we’re not charged any interest.
Janie: I have concerns about data backup system. We do of backup at our business every15 minutes. We should do more frequent backup. It’s operational, but important.
Eric: Front end system is running all the time; can’t do backup in that time. We keep manual backups. We have server, computer, plus manual backup
Doug: Front end server and member server have raid server.
Kevin: Look at problem with refrigeration breakdown. Would that have been a violation of an asset protection?
Eric: backup system cost exceeds value of the goods lost.
Kevin: If it’s breaking down on a regular basis, would that have been a failure?
Eric: One of our driving reasons for renovation was to get better equipment. Doing it piecemeal wouldn’t have worked. Would not have been energy efficient.
Julie: ‘Routine maintenance will be followed’. We would have to write new interpretations if we want to keep top of the line.
Motion to accept B6 Asset Protection report
M/S Darius/Mike
Passed unanimously
B8: Emergency Management
No discussion
Motion
to approve B8 Emergency Management report
M/S Darius/Julie
Passed unanimously
B9 Member relations report
Stacie: 50 hours for reviewing member lists?
Eric: No, it’s for all things related to membership.
Kevin: Carrots in the classroom; what’s that about?
Stacie: It gets reported in Education report..
Kevin: Market trade area study is done about every 3 years. This year it’s after 2 years to fit within strategic planning.
Eric: Can do it in 4 years next time. Needs to be approximately every 3 years.
Doreen: for C, ‘gather information’, would you consider member shopper survey as being part of it?
Eric: Yes, I would.
Doreen: I put 4.5 in the agenda for this. Maybe you could include it in the report. We’ll talk about it when we get to 4.5
Darius: I noticed that payroll was over budget
Doreen: Let’s wait until later to discuss that.
Motion to approve report B8 Emergency Management:
M/S Doreen/Darius
Passes unanimously
Doreen: Why wasn’t Financials in the report?
Eric: Every month we report, inventory is reported on quarterly reports.
Doreen: What are we supposed to do with info?
Eric: If you saw something that concerned you, you could address it.
Doreen: Then Darius, you should’ve added it to the agenda.
Darius: Okay.
Eric: High because of hours for renovation and customer service. Now we’re cutting back on that to stay in budget. Sales grew 8%, payroll up 16%.
4.5 Member Shopper Survey:
Doreen: Intended to talk about it last meeting. Wanted to make sure people read it and see how we might utilize that data. Asked Eric what key findings are and if anything resulted in making changes.
Eric: Survey was created by NCGA and we tailored it. We did a survey in 2004 which overlapped with theirs. 2004 survey had 400 responses, which is statistically significant. Overall satisfaction: 57% good or excellent. 87% in 2008. Where do you spend most grocery dollars? 32% spent most in 04 67% in 2008. Eric reported on a few more question responses.
Stacie: Specific actions?
Eric: None yet. Have to take it back to staff.
Russ: Seems like first set of numbers relate to market share. What are the major drivers?
Eric: Customer count has increased since renovation.
Mike: Survey was randomly mailed, and web survey had self-selection.
Eric: Potentially yes.
Julie: We mailed a lot more surveys, so those that we got back were also self selected.
Kevin: Numbers indicate that we should be $20M business. The math doesn’t hold. Makes me worry about the entire survey. Maybe we should do a web survey every 2 years and in between, do a mailed one. I worry about web surveys.
Doreen: Surveys are different. This is good for ballpark comparisons. Look in absolute terms. 14 to 47 is good, but maybe we should try for higher. This might be falling to one of the lower scores we have.
Eric: Ben from Raise the Bar said that surveys show that 20-30% of shoppers shop at delis and the rest don’t at all.
Kenna: look at sales and customer counts. That’s an accurate assessment of how successful we are.
Stacie: My class analyzed cost of moving to ‘satisfied’ to ‘very satisfied’, from getting members to go from being casual to a committed shopper. You can get a lot of return from doing that. I want to push for that.
Eric: 2004 survey showed older, middle-aged responses compared to 08. Could be because of web base.
Darius: I think the numbers work. I don’t know what the difference is between satisfied and very satisfied. I don’t care. We’re here to provide economic service to owners. Sales reflect that.
Julie: When we’re going to pull a document from a previous packet, we should be reminded. I’m at a disadvantage.
Stacie: can we get Eric’s comparisons?
Kevin: ‘Very satisfied’ issue: I want to find out why some of my friends, who were previously highly committed customers moved to become very casual. Where do these people go? Is there a pattern? How can we stop the loss of key members?
Joan: I would like to see comparison of choices. What do you think about these results?
Doreen: we’re working on that. It will come up later in this meeting.
4.6 Bylaws revisions for additional shares:
Jack: We made it readable. It’s substantively the same as last month.
Doreen: It’s a great improvement.
Julie: I appreciate how much work Jack and committee put into this. I don’t think it’s good to set up membership for $10 to $81,000 dollars instead of 10 to 300 dollars.
Jack: I’ve spoken to Shawn in MN. They found that these kinds of shares attracted the lower amount. They saw offering the shares with membership at 8,000 or 10,000.
Julie: Loan people make decision differently than share people. Share people say “I will make decision based on wanting 4% paid to me every year”.
Stacie: Organic Valley shares are 6%; similar to our structure. When I bought those shares, I signed document saying that I recognized that they could change the interest rate.
Darius: These are voluntary. If I don’t like it, I get my money back. Even with patronage refunds, people get angry when they don’t get it back in those years we don’t distribute. With stakes raised, it could affect politics of co-op.
Doug: This is fundamental change to the co-op. Organic Valley is a producer co-op, so you’re not a member. And regarding pulling out at any time- when the co-op issues nonvoting stock, then the filing we make with Dept. of Corporations will have details about buyback. We have to lay it out ahead of time. Board needs to decide dividend rate based on capital costs and pressure from people who are investors. Can’t assume everything else is held equal.
Kevin: If a member is on the board, and they have shares, do they need to declare conflict of interest? Based on the level; few shares- no.
Julie: example of using funds for building a pool.
Does the board have ability to accept a maximum level? Usually there’s a set amount of shares you want to sell.
Jack: That would be in boundaries policies.
Darius:
Co-op can issue shares through Eric. We might put conditions on
shares through boundaries policies.
Julie: If someone is going
to be running for the board so they could affect interest rate, their
attention is severely misplaced.
Joan: Does this change reporting requirements? To whom, what, etc.
Jack: Taking advantage of intrastate tax exemptions. Don’t have to report to federal securities exchange, just to state.
Motion: Place amendments on ballot
M/S Russ/Mike
Passed Unanimously
Second Motion: Recommend passage of amendments
M/S Russ/Jamie
Opposed: Julie
Motion passes
4.7 GP9– Trusteeship & Relations to Members, Paragraph H – Mediation Procedure - Second Reading
Stacie: We’re going to talk about mediation tonight. We’ll put entire revised policy at next meeting. Last meeting we were in noncompliance. Now we’re talking about action plan to become in compliance. Adopted at last meeting. Don’t worry about first part.
Doreen: We need to discuss whether or not we want the co-op to pay for mediation costs. We also need to look at timelines where proposal is that some action will happen within 2 weeks. Need more time than that. Can’t commit to those timelines.
Darius: I dropped the cost thing off. If someone wants to do mediation, they should pay for it with us. Maybe we could do a spreadsheet so we can see the timeline. It did go slow this time.
Kevin: On number 5, need to fix the language. Paying for mediation: there’s value in paying for mediation. It reduces chance of lawsuit. It’s a good faith effort to avoid litigation.
Julie: what’s the cost?
Kevin: Maybe 100$/hr.
Doreen: I think it’s important for us to say we’re willing to pay up to a point.
Kevin: Half, full, or what? Say pay towards mediator, but not amount.
Jack: Say “up to full cost”.
Joan: Invite member owners to follow through, and you can limit what the co-op offers.
Doreen: Want to make it clear and easy to implement. If it’s up to board discretion, then it’ll take a lot longer. Need to make this easier.
Stacie: opposition would look at us picking a mediator as stacking the cards against them.
Darius: If we can find 3 free mediators, then the member owner picks their preference. If we paid for this last mediation, I don’t know what it would cost.
Doreen: mediators might come and go.
Julie: I get protective of board time. Don’t want to give all our volunteer hours away. Most people don’t enjoy mediation. Want to make sure future boards enjoy this. Means limiting our commitment to mediation.
Darius:
re: board time- if the board says we don’t want to spend any more
time on this, then we’re saying ‘then bring this to the courts”.
I would be hesitant to state it that way.
Julie: something that
puts limits on what the process is going to be.
Darius: Clearly state what the issues are.
Stacie: will come back with full reading.
4.8 Revised Ends
Doreen: I have comments from Darius. My feeling is that I can’t take this on to try to correct the problems that Darius sees. Someone else needs to take this over. Three options: live with existing ends, make minor changes, or someone else takes over the process.
Julie: We’re 3 meetings away from a new board. Let’s table until August, go through retreat.
Kevin: One of the things that David Ball reminded me of is that we’re arguing over the most basic thing we’re supposed to be doing. The summer retreat should be focused on this. David said: after the global statement, the next 6 things should be clarifying it. Doesn’t look like we can do it.
Janie: looks like we’re trying to craft a novel. Too much wordsmithing. PCC’s is mundane and they’re not in mediocre shape. I’m not sure the perfect sentence will change the direction of the co-op.
Doreen: I like tabling, I understand Janie’s opinion. Want to spend some time on it at board retreat, but not all. Kevin should take over.
Russ: I want to approve and let next board improve it.
Kevin: GM has to interpret them. If they’re clearly not what we want to say, then we won’t get the interpretation we want. We can do simpler wordsmithing online. Then we can deal with bigger issues, i.e. Education, should it be method or Ends?
Darius: Words do matter. I’m concerned about global ends statement, some ends are means. Do it at retreat. Focus on Policy Governance training.
Stacie: I’d be happy to approve it. I didn’t know how these would fit in with the rest of the organization. Takes a year to understand.
Doreen: Don’t agree to revise as is. They need to live at least a year before changing. Domino effect: interpretations, calendar, so we need to stabilize these and deal with them next year.
Janie: I’d like to see unanimous vote on these, and I don’t think we have it.
Darius: Might be better to do that in winter retreat. If board wants to take control of the organization, this is the way to do it.
Julie: True that having already developed all the reports for ends we have in place. Worth leaving them alone to see what we get.
Doreen: We worked a lot on interpreting those ends.
Darius: Where would be in Jan/Feb? some would be monitored. Winter retreat would be opportunity to see if it’s broken or not.
Kevin: We are a leader in the food shed. Dave’s interpretation was in reference to other food co-ops. Global Ends statement isn’t clear to me.
Darius: It’s so vague that Eric decides what it means.
Doreen: Put on May agenda as a second reading and Kevin will lead it.
5.1 Strategic Planning (Status on B4 Budgeting and Financial Conditions, section A (iv) Strategic Plan: Overall Structure
Darius: you’re going to give us a strategic planning report every year, right?.
Doreen: should stay on agenda every month. Be more specific about what you’re going to have on agenda in May, for example. Good to see if there’s a survey, for example. Might be worthwhile to see these for comments.
Jack: Ends get done by strategic planning, but I don’t see “Ends” in this document.
Eric: It’s in the interpretation, not in this calendar.
Kevin: How does an organization think long term? How are you going to bring those concepts in?
Eric: Yes, but can’t be specific tonight.
Doreen: It will be standing agenda item every month.
Darius: We don’t’ look at budget every month. Expansion of our budget. Why would we look at it every month?
Stacie: We’re only doing this for this year. Not happening every year. I like that you’re talking about long range vision plans.
Eric: NCGA and John Sutti have been working on a plan for coops to expand by buying existing independents. Business owners are retiring. The problem is that those stores are most likely more mainstream than we are.
Kevin: bigger question: are we looking to go outside of Davis? Membership needs to get involved in decision to move outside of Davis.
Jack: Ends say we are a leader in our foodshed, so it’s justified.
6.1 Discuss how to use new Website for better member linkage and Board transparency Linkage:
Doreen: We’re starting conversation tonight. Now we have nice website, need to think about how we’re going to use it. Are we going to post minutes of task forces, schedules for task forces? Post board packet or portions of it? Capture email addresses, Board newsletter. Start thinking about it and executing some.
Joan: Charter of task force is important. Need to put that up.
Darius: Can someone just make a list and give it to Luis to put up?
Kevin: The report changed my mind. The board has already dealt with this. There’s a lot of issues about what goes up on the web.
Doreen: It’s an opportunity and I want to hear everybody’s opinions.
Julie: I think there are problems with posting the packet on the web.
Jack: Forums, classified ads. Dynamic websites bring people. Maybe a craigslist for members could help.
Darius: Some things don’t need discussion: putting up task force info.
Kevin: This is complicated. Liability for a lot of this. I’ll try to set up a member linkage task force meeting to talk about this.
Doreen: I agree with Julie. Email list for distributing parts of the board packet would be good. The policies and monitoring reports, for example.
Julie: Shouldn’t include GM monitoring. He needs to write without thinking of a public audience. We’ve promised him that.
Kevin: There will be a Member Linkage task force next month where we’ll talk about this.
6.2 Next Member Survey moved to May.
6.3 Annual report
Doreen: comments due Wednesday. If there’s an accomplishment that didn’t get in there, let me know. Reviewed what was discussed at annual meeting.
For this next meeting, we will want to discuss second store. What should we present?
Kevin: that the offer was so far out there, we couldn’t consider it.
6.5 Member Capital Survey
Julie: Pulled it because only 115 people participated. Board linkage is supposed to be about board members linkage to members, not giving that responsibility to staff. I don’t think its appropriate. Had an issue that interested board members form ad hoc committee to educate members, then we’re skirting closely against board policy.
Darius: I read it as meaning “if you’re interested, get out there and do it”.
Doug: I sent comments to Kevin. If staff is going to take responsibility for
Only got 1% of members to respond. Timing and method were issues. Drawing conclusions a mistake. Adopting this as a document where directors should go educate members is raising a red flag. Board said to do that last year, and Board has spent a lot of time talking about that decision since then.
Darius: needs to have help from staff at register to promote taking the survey. There’s leaflets, but nobody takes them. Cashiers can say something or hand them leaflet.
Janie: If we accept this report, are we doing it?
Darius: Not binding ourselves.
Kevin: Not expecting this would be happening. This is a report, not become part of a record. I would pull it.
Doug: It’s a TF report and these are our recommendations.
Darius: We could accept report, accept plus make recommendations, etc.
Kevin: I’m pulling it, we’re not voting. We’re discussing it. My recommendation is to leave it and move on.
7.1 Form DFC 201 Task Force and Set Date for Training
Kevin: CDS group. They provide consultants, conference, and others. Are we going to focus on policy governance as a core part of our retreat?
Julie: Reference said that they’re big strengths is in monitoring reports. Very helpful. I recommend using them if we can get a specific person.
Doreen: I think we can negotiate a different package than what they’re offering. Need to set schedule today.
8.1 March Minutes
Darius: I noticed one error- G8 should be GP9. I want to amend minutes to change reference to ‘G8’ in the March board minutes to ‘GP9 report’
Motion: Accept minutes as amended
Darius/Mike
Unanimous
8.2.Dave Webb motion:
Julie: This is not board business. GM should make the decision.
Doreen: Board doesn’t want to write articles, but we need to be involved.
Darius: We need to authorize you to spend money on it.
Julie: Board directs GM
Doreen: Board and GM work together.
Motion: The board directs GM to support president to write approx 4 survey articles for Choices and DFC web site.
M/S: Darius/Doreen
In
favor: Janie, Stacie, Darius, Doreen, Russell, Michael, Kevin,
Jack
Opposed:
Julie
Motion passes
8.3 New Business: Election Task Force issues with the Voters’ Pamphlet
Darius: Election task force issues.
Julie left
Jack left
Darius: Delete the note on one of the provisions in brackets and redlined.
Julie returned
Darius: We’ve approved pro or con. Want to keep it consistent. Replace first with second.
Motion: Accept all
three changes in document prepared by Elections Task Force on
Propositions 4 (Method of Removal of Directors) & 8 (Election
Policy)
M/S: Julie/Russ
Motion passes unanimously
8.3 Elections (Continued):
Julie: 2 references to attorney comments. Only where we were violating statute. We can take those out. I’m not going to vote to give authority to put things in. There’s one place that the attorney recommends we narrow our definition.
Julie read from 4,5, and 7, which had notes from attorney.
Darius: take out attorney reference in 7.
Motion: Remove reference to attorney in proposition 7: Termination of Membership for Cause .
M/S Darius/Julie
Julie: read from section (will get to Luis). Add language to read "we are amending this section to more clearly define ‘cause’"
Doreen: If we don’t refer to Laddie recommendation, Team 1 will accuse us of withholding information.
Julie: I don't believe Lushin said anything about staff directors.
Kevin: Provide them documents and let them do as they see fit.
Doreen: That’s attorney-client privilege. Can’t do.
Julie: Three choices: 1) no references at all; 2) include every recommendation by Laddie by reference; 3) include only places where attorney has told us we are in violation of statute.
8.4 John Ashby letter: Co-op received letter on ‘interestified’ facts on fully hydrogenated fats. It Hasn’t met requirements of product challenge, though, but he didn’t know about the product policy challenge.
Julie: Propose to send back to him with our policy on product challenges and acknowledge receipt of his letter.
Unanimous consent (no motion)
Return to 8.3:
Doug: Don’t see anything in the letter that says anything on staff directors.
Eric: From personnel attorney, he said that retaliation would be the problem.
Darius: They’re asking us to write it their way. I want to vote no to them.
Motion (to remove reference to attorney in Proposition 7) Passes Unanimously
May Facilitator: Julie
May Timekeeper: Jack
There being no further business to come before the meeting, it was adjourned at 10:32 p.m. by a motion made by Julie, seconded by Russ, and passed unanimously.
Notice of Closed Session
A special meeting of the Board was called to order by NAME at TIME, and carried on until TIME. This closed session was continued during the period from. to. Both sections of this session were closed to guests pursuant to Board Policy GP6(D), which requires discussions concerning issues of a sensitive nature be held confidentially.
Directors Present: Janie Booth, Julie Cross, Stacie Hartung-Frerichs, Danyal Kasapligil, Darius Pazirandeh, Doreen Pichotti, Russell Snyder, Michael Ulrich, Kevin Wolf, Jack Young
Directors Absent: Steve Reynolds
The closed session was adjourned at p.m.
/s/ Julie Cross, Secretary
__________________________________ ______________________
Secretary, Davis Food Cooperative, Inc. Date Approved
APPROVED Board Minutes April 6, 2009