For those who wish to hear the side of the majority, here is a list of questions that were answered in the interview process for last week’s article, “Food Fights.”
To all Members and the Free Weekly Newspaper:
The following four members of the Board of Directors are collectively responding to the questions Free Weekly has submitted and are providing the following which hopefully communicates to the members the majority of the Board’s position on recent events at Ozark Natural Foods. These members are Jim Roughton, Kathryn Scherer, Susan Graham and Linda Ralston.
As a member of a brand new board, do you meet with or discuss current ONF issues with previous board members?
Yes, many of the previous Board members, along with other interested owners, regularly appear at our Board meetings and the Board accords all owners a 15 minute comment period. Former Board members past experience can be particularly valuable in understanding issues that occurred prior to the current Board’s service.
Who? What benefit does this have to your decision-making?
The Board minutes may reflect attendance at the various Board meetings by all of the owners. The benefit is to provide prospective on all issues.
Why were Tuesday and Colleen removed from their positions as President Chair and vice-president?
All officers serve at the pleasure of the Board and any officer may be replaced when, according to the bylaws, it is in the best interest of the cooperative. Various actions taken or failed to have been taken by the previous President and Vice-President influenced the decision of the Board to replace Tuesday and Colleen.
What privileges, responsibilities and duties do the President and Vice President hold, specifically, which of these duties were performed inadequately or what privileges were being abused within the previous tenure?
The bylaws do not require any violation of duties since the officers serve at the pleasure of the Board.
Who appointed Jim Roughton as President Chair?
The majority of the Board voted to replace Tuesday with Jim.
It has been alleged that the appointed President should not remain on the board after a voting period past the Annual Owner’s Meeting, should Jim Roughton technically be on the board?
Yes, on advice of legal counsel, it was shown that a Board member who “holds over” for whatever reason continues to serve until his/her successor is duly elected/appointed and seated. We have been told by counsel that Arkansas law provides for this.
Please explain the circumstances behind the extended ballot.
There have been numerous problems with the internet website for voting, notices being or not being sent, the inability of some members to vote, discrepancies in candidate information and the withdrawal of one candidate. The bylaws provide for an extended time for balloting and the Board believed that, in fairness to all members who desired to vote, that the extended time was both fair and reasonable.
Why was Alysen Land fired?
The Board of Directors chose to terminate the contract of the General Manager, Alysen Land, in accordance with her contract that allows for termination “without cause.” This is not the same as “no cause”.
To be fired without cause seems to have affected some ONF employees’ confidence in their job security. Did you consider how this decision would affect the employees or the message you were sending them through this action?
Any employee of any company in the State of Arkansas who does not have a contract for employment is an “at will” employee. The Board has been advised that any employee at any company may be discharged without cause, provided it is not for a constitutionally prohibited reason like age, race, sex, religion, etc., so this discharge should not cause any employee to be concerned beyond what the law already provides. The Board’s intent was to convey to the employees through the interim General Manager (IGM) that we did not intend to take further staff action. The General Manager, over the years, terminated employees in the same manner.
Do you admit that there is a majority alliance on the board, whether informal?
With respect to most of the issues that you raise, there is not only a majority but a very vocal minority alliance as well. While the votes of the Board of Directors are contained in the minutes and have not always fallen along these lines, some of the current issues have divided the Board and we regret that division. Our efforts to seek a consensus have not been successful.
What unites the four (or three) of you?
The uniting factors seem to be a desire to improve the operation of the coop, to insist on accountability from management, to insist on being fully informed about the issues and not blindly accepting what management or anyone else reports to the Board without determining the information is reliable and reasonable. The “majority”, Jim, Kathryn, Susan, and Linda, believe that the Board should not merely be a “rubber stamp” for management but should exercise its own independent judgment. We believe that is the reason we have been elected to the Board and that is what is required to properly discharge our responsibilities as directors.
What is at the heart of the conflict between the two groups on the board?
We think that our response to the previous question reflects the conflict between the two groups.
It has been suggested that much of the conflict centers around the decision to pay off the store, or move to pay off the mortgage and that the owners should have been involved with the decision.
Certainly Board concern over that decision caused some disagreement on the Board. The Board is charged with managing the cooperative and, unless delegated to management, that decision must be a Board decision. However, Susan and Linda felt very strongly that it was important for the owners to be able to comment on the issue before the vote.
Explain the importance of paying off the store.
The decision to pay off debt on the store premises affects the cash flow of the business and many other factors dealing with the operation of the store and the pricing of products to the owners and others.
Or, if you disagree with the decision, what would you have preferred to see funded?
There are many considerations that go into what and how funds of the cooperative are used. The decision to pay off the debt involves assessment of interest rates, the sort of long term funding available, the ability of the store to meet all of the expense demands that are placed on it.
If the controversy centers on a desire to involve the owners, should the owners be involved in other major decisions as well, such as firing Alysen Land?
It is not usual, customary or proper to consult the owners on every such issue placed before the Board of Directors. That is why the Board is selected by the ownership and is charged with management of the cooperative. Because the Board must directly deal with management, that is particularly a Board decision.
Are there any bylaws that address the owners’ involvement in board decisions? Will changes in the bylaws be made to allow the board and the owners to share power when making such large decisions?
The owners have the power to elect directors just like we all elect Congressmen, Legislators and other representatives to government. That is the way government works and that is the way businesses work.
Alysen Land has a nationally recognized leadership in the co-op grocery community, and it has been said that the board had no succession plan in place; and that after firing Alysen, relied on the very succession plan she had put into place. Why was Alysen’s leadership trusted in this regard?
Trust is an ongoing thing. Alysen certainly has been successful in various aspects of management in the past. It is certainly unfortunate that communication, not only with this Board but prior Boards, continued to deteriorate.
Why was the special meeting called? Who called the meeting? (I have a note here that says the clause for calling a special meeting requires a certain number of owners to call the meeting.)
The former President, Tuesday Eastlack, called the special meeting. The majority of the Board is still uncertain as to why it was called and the Board was informed that the reasons given for removal of Sue and Linda were insufficient legally under the statute to permit removal.
Explain grievances against Linda and Sue.
The majority of the Board is still uncertain as to why Garrett Brown sought to remove Sue and Linda. The petition reasons given were very vague and legally insufficient for removal.
When was your lawyer hired?
The Board voted at the February Board meeting to hire an attorney familiar with cooperatives.
For what purpose was the lawyer hired?
The Board felt it was necessary to obtain an attorney who had experience with cooperatives.
Why was it deemed illegal? Is this according to state statutes or the ONF bylaws?
Legal counsel advised that the state statute only allows for removal of a Director “for cause.” Our bylaws improperly allow for removal without cause. The notice to the members carried this error forward and suggested to the members that removal could be without cause. The fact that our bylaws were improper in this respect illustrates the need for good legal advice and the mandatory revisions to our current bylaws.
According to my notes, the special meeting was announced on Feb. 27., which gave the board a month to consider the agenda and meet bylaw requirements.
The attorney the Board hired had to conduct the research and provide an opinion. Because the notice had already been sent by the former President, it wasn’t immediately known that the special meeting was not proper or that there were other deficiencies in the process. Our attorney advised that the bylaws, with respect to Director removal, were not proper and violated the state statute under which the coop was created.
Why was the special meeting cancelled and what measures were taken to notify owners of the cancellation?
The special meeting was cancelled because the process, including the notice as well as the broad, vague reasons for removing Sue and Linda, were not legally proper and the Board was so advised. The Board took all action that it could to notify members both through the internet and by notices posted at the store.
How do you respond to the opinion that the decision to cancel the meeting was subversion to the democratic process that defines a cooperative?
The decision to cancel the meeting did not subvert the democratic process because that process was legal. There are legal requirements to removal of a Director and they were not met. The Board would have been violating its obligation to the owners to move forward with an illegal process.
What is your interpretation of the owners’ initiative to rent the space and conduct the meeting without approval from the board?
We were not involved in that process. We understand that some of staff rented the space in order to have a place, away from the store, to discuss issues related to management.
If the bylaws still exist, and no changes have been made, why has the decision been made to abandon the bylaws before new ones are in place?
No decision has been made to abandon the bylaws and no comprehensive review of the bylaws has occurred, although one is certainly necessary. It just turns out that the bylaw for Director removal without cause is not permitted under the act which allowed for creation of the cooperative.
How can the owners hold the board accountable while the bylaws are in flux?
Owners are entitled to vote for Directors. Directors act in the best interest of the cooperative under legal standards. The bylaws are effective except when they contradict state law.
In your opinion, what is the function of the board?
According to the statute allowing for creation of the cooperative, the function of the Board is to manage the cooperative.
What role do the owners play in the cooperative?
The owners elect Directors and have those rights given them under the statute and bylaws.
How involved in day-to-day matters do you think the board should be?
Boards of Directors have varying degrees of involvement in day to day activities. The history of Ozark Natural Foods is to delegate substantially the day to day matters to management. However, it is the Board that is charged with managing the cooperative and the extent of that delegation can vary.
Does the board have access to personnel files other than the GM?
The Board is, as a group, charged with the entire management of the cooperative. It is governed by the same legal constraints as the General Manager and has the same obligations of confidentiality with respect to any aspect of the cooperative. Management should not and cannot legally keep secret from the Board of Directors any aspect of the management of the cooperative.
Does the board have more than one employee?
The Board doesn’t have any employees. All employees are employees of the cooperative and the cooperative is managed by the Board of Directors. The Board can choose to define the lines of communication and reporting.
Why was Stephanie Conway terminated from her position as scribe?
Stephanie Conway was not terminated as an employee of the cooperative. The secretary of the cooperative is charged with the responsibility of various record keeping duties including taking the minutes.
Though mediation between the board and Alysen Land was struck down (this year), what types of things would have been discussed in such mediation?
We don’t know. Presumably, all things that bear on the Board management relationship.
Would you be willing to participate in mediation within your own group?
The Board voted to employ a mediator with respect to the Board differences in an effort to assist the Board in this management of the cooperative.
What do you see for the future of Ozark Natural Foods?
We see a bright future and continued success.
Are there any matters of which you and the opposing members of the board can agree upon?
Yes, we hope so.
Can you discuss Ozark Natural Foods’ plans as national chains move into the NWA area?
We hope that new management and a solid business plan will be developed.
How does Ozark Natural Foods plan to continue growth without Land’s leadership?
We have great employees. We will have a very capable new General Manager. We are confident that Ozark Natural Foods will continue growth and have great success.
Is ONF in jeopardy?