The Co-op Food Stores

MINUTES
March 19, 2008

Present: Don Kreis (Chair), Peter Betts, Margaret Drye, Ed Howes, Kay Litten, Ann MacDonald, Richard Schramm, Mike Yacavone
Absent: Diane MacDonald
Staff: Terry Appleby, Eugenia Braasch, Steve Miller
Guests: Mark Goehring, Helen Brody

Welcome and Introductory Remarks
Margaret Drye called the meeting to order at 5:30 p.m. In addition to the regular guest, CDS consultant Mark Goehring, Helen Brody introduced herself as a Board Candidate with expertise in specialty foods, as a cookbook author. Don Kreis arrived at 5:40 p.m. and chaired the meeting after the dinner break.

Agenda Review & Changes
There were no changes to the agenda.

Prior Month Action Items Review
1. Write a point-counterpoint article about “Members Capitalizing the Co-op” for the Co-op News (Richard, Mike, Rosemary). This article is targeted for the June issue.
2. Plan a Board retreat at the March meeting. Draft a proposal for the retreat topic & venue (Don and Mark). The board decided to hold the retreat on Saturday, August 23, 2008. Several locations were suggested and Genie will look into the availability and cost aspects.
3. Present King award nominees for Board selection at March meeting (Genie).
4. Approve the proposal for HCCF recipients at the March meeting (Bob Hayes and HCCF committee members). Due to a change in fiscal year, information about the funds for distribution is not available yet.
5. Read M. Shuman’s book, Small-Mart Revolution. (All Board Members – in process)
6. The proposed by-laws changes will be put to vote at the Annual Meeting. (Don – to be completed in April)
7. After the audit is completed, ask Tyler Simms to review the proposed by-laws changes (Article V Sections 2a and 4) that were discussed, but not brought before the membership this year. The Co-op Board is seeking advice about the tax implications of the potential changes to the membership. (Margaret, Don – pending)
8. Contract with a legal firm to conduct a comprehensive review of the by-laws. (Margaret, Don – pending)
9. Proceed with the Annual Meeting planning. (Kay, Diane, Margaret – in process)
10. Proceed with the Business Roundtable breakfast planning. (Don, Mike, Richard – in process)
11. Identify and generate the invitation list(s) for the Business Breakfast Roundtable. (Richard – in process)
12. Hold a planning conference call for the Business Breakfast (M. Shuman, 10 Upper Valley business leaders (tbd), Terry, Don, Richard, Genie).

Co-op Stories
Kay Litten shared information about her shopping experience at the Wild Oats Co-op in Williamstown MA. She reported that prices for comparable foods were 20% higher at Wild Oats.

Approval of February 20, 2008 Minutes
MOTION: Ed Howes moved to accept the February 20, 2007 minutes, as amended.
Mike Yacavone seconded the motion.
VOTED: To accept the February 20, 2008 minutes as amended: 7 in favor, 0 opposed, 1 abstained, 1 absent.
The motion passed unanimously.
The following changes (underlined ) were made to the minutes on p. 4:
Patronage Refund
“MOTION: Mike Yacavone moved to amend the GM’s patronage refund recommendation to a 50% stock and 50% cash payment of the 2007 Patronage Refund of $561,444 to the Co-op membership.
Peter Betts seconded the motion.
VOTED: Not to accept the amended GM recommendation for a 50% stock and 50% cash payment of the 2007 Patronage Refund of $561,444. to the Co-op membership: 4 in favor, 4 opposed, 0 abstained, 1 absent.
The motion did not pass.

$561,444. is available for the 2007 patronage refund. Usually, individual Co-op members do not receive a significant amount of money as their refund, but it has symbolic significance, and the point was made that it would send a negative signal to the Co-op membership if the refund cash amount decreased after a year when the Co-op achieved record sales.”
A brief discussion took place regarding the scope of the minutes. Some board members expressed the desire for succinct minutes, suggesting that highlights of reports (as appear in the 2.20.08 minutes) be omitted from future minutes. The point was made that the minutes should reflect board discussion only. If the minutes reference a monitoring report, then that document can be located and read in tandem. The board also discussed transparency, whether certain portions of meetings should remain confidential.
Action Item: Consider this issue, establish criteria, and make a recommendation at the April meeting (Peter Betts and Richard Schramm).

Annual Meeting: April 27, 2008 and Upper Valley Business Breakfast: April 28, 2008
The Board Administrator provided a handout status report about the two events. Board members said that they appreciated receiving an e-mail from the Education Director about annual meeting practices at other co-ops, and particularly liked the idea of putting member comments first on the agenda, as the goal of this meeting is to engage membership. After revising the annual meeting agenda times slightly, the board discussed the issue of how to encourage members to attend and agreed to distribute an email about the event to their personal networks, using a standard announcement written by a Co-op staff person.
Plans for the Business Breakfast are progressing well, with co-sponsor input and involvement. The expectation is that this meeting will serve as a catalyst for convening a working group to plan and manage future events, leading to positive long-term changes for the Upper Valley.
Word-of-mouth publicity about the Shuman talks is generating excitement in the community and the board anticipates strong attendance at both events.
Action Item: Ask Rosemary Fifield or Allan Reetz to write an e-mail Annual Meeting announcement for board distribution (Genie).

Board Retreat
The Board decided to hold a retreat on Saturday, August 23, 2008. Several suggestions for meeting locations were proposed. The CDS consultant will facilitate an in-depth discussion at this meeting and will help to develop the topic.
Action Item: Explore the availability and cost of facility use at Dartmouth for the board retreat and make a recommendation at the April meeting (Genie).

The meeting broke for dinner at 6:05 p.m.
The meeting resumed at 6:35 p.m.
Policy Monitoring
Approval of Ends Global Monitoring
MOTION: Peter Betts moved to accept the GM’s report as in compliance with Ends Global.
Ed Howes seconded the motion.
VOTED: To accept the GM’s report as in compliance with Ends Global.
8 in favor, 0 opposed, 0 abstained, 1 absent. The motion passed unanimously.
All board members were very enthusiastic about the achievements of the Hanover Co-op during 2007 and commended the GM for the content and presentation of the Ends Global Monitoring report. The board also endorsed the GM’s intention to continue to develop quantitative measures for assessing progress towards the seven global ends statements. “Doing the right thing “ for the greater good of Co-op members and community has costs and benefits that are not always easy to convey, but factor significantly into the fabric of the organizational culture, and are made explicit through the Co-op business model. Several suggestions were made: to consult an expert regarding the design of a metric that measures behavioral effects resulting from Co-op involvement; to include summary records of educational programs and activities as an illustration of the range of member services offered by the Co-op; and to match all Co-op activities to a specific end, thus revealing either that an activity is tangential to the goals of the organization, or that the stated goals need revision.

A brief discussion touched on cigarette sales and use at the Co-op. While there is no policy about this topic that directs the GM, the sense of the group was that a concerted effort should be made to help Co-op employees to stop smoking through, for example, smoking cessation programs.

Action Item: Distribute the Ends Global Monitoring report to the membership and general public (Terry, Genie, Allan, Rosemary).

Policy Drafting
EL2 (Financial Condition and Performance)
MOTION: Mike Yacavone moved to revise the EL2 policy, adding “EL2.8: Keeping less than 30 days cash on hand, notwithstanding any lines of credit or other external sources of funds.” Kay Litten seconded the motion.
VOTED: To revise the EL2 policy, adding “EL2.8: Keeping less than 30 days cash on hand, notwithstanding any lines of credit or other external sources of funds.”
1 in favor, 7 opposed, 0 abstained, 1 absent. The motion was rejected.
This policy was presented by a board member who believes that the auditors’ advice to increase the days cash on hand ratio has been repeatedly ignored by the board for several years. An additional concern was that the Co-op board has not fulfilled its fiduciary duty to the membership through its policy directives to the GM regarding cash management practices. Several board members explained that they would be uncomfortable if the repeated advice of experts was not taken, but they had a different understanding of what the auditors said. The expertise of the auditors regarding days cash on hand in the grocery industry was also questioned by the GM, who characterized the auditors as fiscally conservative, and presented data from SEC filings of several leading grocery businesses that illustrated that the Hanover Co-op’s business model is consistent with industry practice.
The board grappled with identifying the nature of the concern. It was pointed out that if the specific fear is identified, then the Co-op could address the issue(s) through a combination of scenario planning, member linkage, and staff preparation. The GM currently prepares a SWOT analysis as part of the annual business planning process. Worries about the viability of the Co-op in a weakening U.S. economy, the financial pressures that the Co-op could face if sales dropped, or credit was not available, and the extent to which the Co-op is prepared to meet these circumstances, werementioned. The board agreed that it would like to develop its capacity to assess and respond to risk. There was consensus that it would be worthwhile to conduct a scenario exercise (possibly at the Board retreat), to explore the balance of potential threats/concerns with strategic goals.
The GM explained that the Co-op’s business model relies on member participation, frequent inventory turns, high volume sales, and patronage refunds. For over seventy years, the Co-op has nurtured member participation and this service orientation has built the social capital upon which the goals and operations of the Co-op are based. Given unforeseen adverse circumstances, the GM advised trusting in the collective membership’s ability to respond and support the Co-op’s objectives. Likewise, with open book management underway, the management team continues to build the staff capital of the organization that will enable the Co-op to respond appropriately to circumstances as they change.
Action Item: The board decided to take part in a CDS cooperative board leadership development webinar session, titled “Equity: exploring member economic participation”, scheduled to take place on April 16th – the board’s next regularly scheduled meeting. Internet access will be provided in the Board Room from the Break Room for the April 16th board meeting (Mark Goehring, Terry, Scott Cleveland, Genie)

Allan and Nan King Award
Susan Gault and Mark Landsburgh were selected as the recipients of the Allen and Nan King Award for 2007. They are both involved with the Willing Hands organization in the Upper Valley. The board asked that next year’s meeting packet include the description of the King Award goals and a list of prior award recipients.

Meeting Assessment
The Board’s enthusiastic response to the GM’s Global Ends monitoring report will be referenced as a key element of the GM annual evaluation.
The Board responded thoughtfully to the EL2 policy revision proposal and that discussion set the stage for follow-up discussion about the Co-op’s capitalization plan.

The meeting was adjourned at 8:53 p.m.

Respectfully submitted,

Eugenia F. Braasch Peter R. Betts
Board Administrator Secretary

Action Items:
1. Write a point-counterpoint article about “Members Capitalizing the Co-op” for the July/August Co-op News, note to authors: deadline is May 16. (Richard, Mike, Rosemary)
2. Plan a Board retreat to take place on August 23, 2008. Draft a proposal for the retreat topic. Explore the availability and cost of facility use at Dartmouth for the board retreat and make a recommendation at the April meeting (Don, Mark, Genie)
3. Approve the proposal for HCCF recipients at the April meeting (Bob Hayes and HCCF committee members)
4. Read M. Shuman’s book, Small-Mart Revolution.(All Board Members – in process)
5. The proposed by-laws changes will be put to vote at the Annual Meeting. (Don – to be completed in April)
6. After the audit is completed, ask Tyler Simms to review the proposed by-laws changes (Article V Sections 2a and 4) that were discussed, but not brought before the membership this year. The Co-op Board is seeking advice about the tax implications of the potential changes to the membership. (Margaret, Don – pending)
7. Contract with a legal firm to conduct a comprehensive review of the by-laws. (Margaret, Don – pending)
8. Proceed with the Annual Meeting planning. (Kay, Diane, Margaret – in process)
9. Ask Rosemary Fifield or Allan Reetz to write an e-mail Annual Meeting announcement for board distribution (Genie).
10. Proceed with the Business Roundtable breakfast planning. (Don, Mike, Richard – in process)
11. Identify and generate the invitation list(s) for the Business Breakfast Roundtable. (Richard – in process)
12. Hold a planning conference call for the Business Breakfast (M. Shuman, Upper Valley business leaders, Terry, Don, Richard, Genie)
13. Consider the issue of minutes transparency and style and make a recommendation at the April meeting (Peter, Richard).
14. Notify the sponsors and winners of the King Award and invite them to Annual meeting. Also, notify the sponsors of the other King award candidates re. the board decision (Genie).
15. Provide internet access in the Board Room from the Break Room for the April 16th board meeting (Genie, Scott Cleveland, Mark).
16. Propose a process for addressing Hanover Co-op capitalization planning next steps (Don, Terry, Genie).
17. Distribute the Ends Global Monitoring report to the membership and general public (Terry, Genie, Allan, Rosemary).