Letter to the Editor: Electric Cooperative Blocks Vote on Board Compensation Disclosure

The June issue of Rappahannock Electric Cooperative’s (REC) Cooperative Living magazine has an editorial describing the supposed virtues of electric cooperatives’ annual meetings, where co-op members “make decisions about their customer-owned utility” and “vote on changes to the bylaws that govern the utility they own.” This, the editorial says, is “an old-fashioned exercise in democracy that’s both refreshing and resilient, a living reminder … of when citizens would get together to make important decisions about their shared welfare ….”

That sure sounds nice. If only it were true.

In July, REC customers receive their annual proxy card. It’s that extra page on the outside of the July issue of REC’s magazine, Cooperative Living. Because REC is a cooperative, every customer is a member and part owner, and entitled to vote at the annual membership meeting. Those who can’t attend in person can vote using the proxy. But what is there to really vote on?

Under REC’s bylaws members elect the co-op’s board of directors and can vote on proposed bylaw changes. REC’s incumbent board members often run unopposed, and challengers who do run for the board find it all but impossible to defeat an incumbent, in part because the incumbent board gives itself the power to vote all blank, signed proxy cards as it sees fit. As for bylaw changes, there have been no proposals on the ballot in the four years I’ve been an REC member, and probably for many years before that.

There should be two issues on this year’s proxy ballot, but REC’s board has blocked that. And that’s a shame.

Virginia law and REC’s bylaws give co-op members the right to propose bylaw changes for a full membership vote. So I proposed two issues for this year’s ballot.

First, I proposed a bylaw to allow REC members to observe board meetings. Open board meetings would give REC members a chance to see what their board is doing and how well it’s managing the co-op’s affairs. If a few concerned REC members could attend each month, they could inform others and serve as watchdogs. Other electric co-ops around the country do this, including the nation’s largest—Pedernales Electric Cooperative in Texas.

Second, I proposed a bylaw requiring REC each year to disclose to all co-op members the compensation paid to each board member. I suspect very few REC members know that the board is compensated. In fact, the board sets its own pay. Board members pay themselves rather handsomely in my view, given that REC is a nonprofit—supposed to serve its members at low cost.

REC members can learn compensation amounts for each board member by asking REC or searching through public tax files. But why not have REC just disclose this information regularly to all members? REC members can’t exercise meaningful oversight on board pay if most co-op members don’t know what that pay is.

To my surprise, REC’s board blocked my bylaw proposals from appearing on the proxy ballot. It seems the board will not allow the co-op’s membership to vote on measures that could allow basic oversight.

The board gave me two reasons why it’s blocking a vote on open board meetings. First, the board said open meetings would violate a Virginia law that requires electric co-ops to provide electricity at low cost. Second, the board told me that Virginia law and REC’s bylaws give the board authority “to make its own rules and regulations as to its procedure.” In my view, REC’s board has strained Virginia law beyond recognition to keep a simple democratic measure off the ballot.

The board’s reasons for blocking a vote on required disclosure of board compensation are truly far-fetched. The board claimed that since Virginia law gives it authority to make its own rules as to its procedure, it cannot allow the co-op’s members to vote on requiring annual disclosure of board compensation. The board added that a Virginia law giving an electric co-op’s board the power to set its own compensation also somehow makes a vote on requiring compensation disclosure illegal.

But requiring REC to tell all co-op members how much the board is paid has nothing to do with the board’s rules about its meeting procedures. And requiring REC to disclose board pay to all co-op members has nothing to do with the board’s power to set its own compensation.

Perhaps in recognition of the weakness, indeed silliness, of its position, REC’s board advised me that it is “considering” implementing some form of disclosure of board compensation to REC members. I doubt that any form of disclosure the board comes up with will be as complete or accessible to co-op members as my proposed bylaw would require. It’s a disgrace that the board has blocked REC members’ chance to vote on full disclosure of each board member’s pay to all co-op members.

Seth Heald

Rixeyville, VA  22737

Seth Heald is a member of Rappahannock Electric Cooperative

 

Comments

  1. n3utr0nru says:

    That’s disappointing Seth. I will make time to call and write in to support your suggestions demanding reasonable accountability! I hope others do the same.