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Subject: Serve at the pleasure of Board
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TeresaR4
(Arizona)

Posts:25


04/18/2019 4:23 PM  
We have a new Web committee that is drafting their charter and do not want the verbiage..."The commiitte members serve at the pleasure of the Board" in their charter. Our other charters have the language of serving at the pleasure of the Board. This committee wants language that basically has conditions of the chair being replaced. Such as, "the chair can only be replaced if they intentially do not comply with the charter."

Our by laws and CCRs are silent on committee charters. There have never been any issues in the past on removing Chairs. In fact, a chair has never been removed. Volunteers are too valuable, scarce and appreciated.

The BOD usually drafts the charter and issues it to the new committee. In this case, we did not, some of the detail of scope of work was technical so thought it would be beneficial to have the committee draft it using BOD approved sample Charter.


The new Web committee finds the Serve at the Pleasure of the Board, meaningless. Most BODs find it normal, common language and appropriate. We understand the BOD will decide but are attempting to see if our line of thought is outdated and are concerned about conditions and the challenge and contest of proving "intential". That seems too subjective.


Any comments of expierence?.
KerryL1
(California)

Posts:6350


04/18/2019 4:35 PM  
If your HOA is incorporated, check corporation codes for AZ, which often talk about committees. Our bylaws, too, say barely anything, but CA Corp codes make it clear that the Board forms committees, appoints its member and chair, and can (and has!) disbanded committee.

Use the language of corp. code. We make it clear to our committees, for the same reason as your HOA, that the Board will accept the committees rec for chair, and approval of members. We too want volunteers!

We had our social committee's strongest members resign en masse- 4 members--after the board prez become way too bossy and micromanaged them to death.

But, it's true that the Board is ultimately responsbile for their behavior.
TeresaR4
(Arizona)

Posts:25


04/18/2019 7:21 PM  
Thank you. You are correct. Our non profit Corporation Commission specifically states....committee members shall serve at the pleasure of the board.
CathyA3
(Ohio)

Posts:243


04/19/2019 5:58 AM  
"At the pleasure of the board" also means that any committee member could be replaced, or the committee disbanded, with or without cause.

This is not at all unusual in corporate structures. The board members themselves serve "at the pleasure" of the membership, since anyone can be elected or not elected based on community vote. You can be voted off the board for any reason or no reason at all.

I'll get on my usual soapbox: associations are not democracies, they're corporations. You don't get control without responsibility and vice versa. Otherwise you'd have a situation where someone is held accountable for the actions of others but without being able to control those actions. The board is legally accountable for what happens under their watch. That means the board ultimately gets to call the shots.
JohnC46
(South Carolina)

Posts:8267


04/19/2019 6:04 AM  
Posted By CathyA3 on 04/19/2019 5:58 AM
"At the pleasure of the board" also means that any committee member could be replaced, or the committee disbanded, with or without cause.

This is not at all unusual in corporate structures. The board members themselves serve "at the pleasure" of the membership, since anyone can be elected or not elected based on community vote. You can be voted off the board for any reason or no reason at all.

I'll get on my usual soapbox: associations are not democracies, they're corporations. You don't get control without responsibility and vice versa. Otherwise you'd have a situation where someone is held accountable for the actions of others but without being able to control those actions. The board is legally accountable for what happens under their watch. That means the board ultimately gets to call the shots.



I agree.
GeorgeS21
(Florida)

Posts:1208


04/19/2019 6:08 AM  
Actually, since membership elects a Board, vice the Board being appointed as in a corporate context, an HOA is more a Republic. Almost a form of parliamentary democracy.

It is democratic at the first level with everyone qualified voting, then at the next level with those representing those who voted (the directors) voting for the officers.

Corporate entities don’t work this way.
MarkM19
(Texas)

Posts:297


04/19/2019 6:30 AM  
TheresaR4,
If this group is giving the board this much trouble at the start of this committee you can probably expect at least as much or more when they get going. Do you really have a need for a Web Committee? What are they going to be responsible to do? What is the charter?

I personally think you guys may be signing up form more trouble than you might think. I would be firm and say this is our committee language. If you want to start one you follow these guide lines.

Committees are not elected they are appointed.
GeorgeS21
(Florida)

Posts:1208


04/19/2019 6:54 AM  
Teresa,

Agree with all others - more harshly, perhaps, in my response to the folks who want a committee outside the governance structure.

Just tell them no. If they push, the Board should terminate them. To be clear, committees have zero standing outside the Board unless t has been given t them.
CathyA3
(Ohio)

Posts:243


04/19/2019 7:35 AM  
Posted By GeorgeS21 on 04/19/2019 6:08 AM
Actually, since membership elects a Board, vice the Board being appointed as in a corporate context, an HOA is more a Republic. Almost a form of parliamentary democracy.

It is democratic at the first level with everyone qualified voting, then at the next level with those representing those who voted (the directors) voting for the officers.

Corporate entities don’t work this way.




They do indeed work this way - at least the ones whose stock is publicly traded do.

Shareholders vote for candidates for the board of directors, with the number of votes depending on the number of shares they own. (Similar to one unit = one vote in an HOA. If you own more than one unit, you get more than one vote.) Occasionally shareholders are also allowed to vote on certain governance measures that the corporation is considering.

If you own shares of stock, you'll receive a notice of the annual meeting along with election materials and a proxy form. You can attend the meeting. You can designate an individual or "the board" to vote on your behalf. Again, very similar to HOA governance. From time to time you may have an activist who disagrees with how the corporation is being run and seeks election to the board by soliciting proxies. Sound familiar? Proctor & Gamble went through that recently.

Corporations also issue annual reports that are sent to their shareholders, just as HOA directors present reports at the annual meeting. Corporations audit their books annually, just as HOAs do, or should do. Corporations pay taxes, just as HOAs do. A republic doesn't pay taxes, it is the taxing entity.

Finally, shareholders have no say in the day to day running of the corporation (unless they're someone like Warren Buffet whose opinions may be listened to). If I'm a P&G shareholder, it doesn't matter how passionate I am about the price of Charmin, I don't have any say in determining that. As a shareholder, I'm not entitled to serve on any committee that the corporate board or management may appoint. Committee service is very much "at their pleasure".

Obviously there are major difference, too. Shareholders don't pay assessments to support the corporation the way HOA members do. But the governance structure, which is what we're talking about with boards and committees and such, are very similar. Homeowners get upset when they believe that they are living in a democracy and then find out that they are not. But that's the reality.
KerryL1
(California)

Posts:6350


04/19/2019 7:56 AM  
As others have suggested, Teresa, the Board needs to closely read the draft charter the committee-in-formation presents to it and make revisions accordingly before the Board approves it.
MarkM19
(Texas)

Posts:297


04/19/2019 8:46 AM  
Theresa,
The bottom line is committees are designed to make things easier on the board. They do the leg work and report back to the board findings. If they are making the board jump through hoops already they are not helping they are hurting. Thank them for their input and go with business as usual.
NpS
(Pennsylvania)

Posts:3239


04/19/2019 3:38 PM  
Posted By TeresaR4 on 04/18/2019 7:21 PM
Thank you. You are correct. Our non profit Corporation Commission specifically states....committee members shall serve at the pleasure of the board.



1. Have you informed committee members that the phrase was not something concocted by the board - it's part of the statutory language that acknowledges the use of committees?
2. Have you informed committee members that any other arrangement might exclude them from D&O insurance coverage?


Je publie un degagement de toutes responsabilite. Read all posts at your own risk.
GenoS
(Florida)

Posts:2892


04/19/2019 7:46 PM  
Seems like much ado about nothing. It doesn't matter what the committee wants. If the committee wrote its own charter and the board approved it with language like, "the committee will operate independently of the board," there's nothing to stop the board from disbanding and dissolving the committee a week later (or a month, or a year, etc.).
TeresaR4
(Arizona)

Posts:25


04/20/2019 7:01 AM  
Thank you all. Yes, the BOD put forth the State Statute on serving at the pleasure of the BOD, reciting the code number. They eventually understood. We of course prevailed on a charter that conformed to BOD requirements. The committee provided some technical detail.It worked out, and we know we can modify anything at any time. Again, thanks for all the pointers.
KerryL1
(California)

Posts:6350


04/20/2019 9:33 AM  
Glad it's working out Theresa. Some HOAs, like ours have a board liaison who attends meetings and helps keep th committee on track re: various things, e.g., budgets or board policy about various items. We do not require on if the committee has a director i on it which often is the case.

Your board might appoint a director to write a "Guidelines for All Committees" so that Owners who want to form one know the Board's exceptions and that it's ultimately responsible.

One of the best reasons to encourage committees is that they're good pipelines for board service.
TeresaR4
(Arizona)

Posts:25


04/20/2019 10:59 AM  
Thank you. We do have a BOD Chadter composed, created using CAI templates. They said they didn't receive it. I did have a sent confirmation.
In addition, we do have a BOD web Liaison to the committee and webmaster. We were excluded from the several month draft process. They showed up with an 8 page charter basically assigning much power to their committee. This was after many monthly reports of " busy, nothing to report". The BOD was shocked, as well as webmaster, we revised most of it. I think this was partly due to lack of knowledge and partly due to some personalities. An issue was made of the process and exclusion of key people and all has been amicabley resolved. I think they understand there is a BOD process that Board members will adhere to. The last disputed issue was the Serve at pleasure of BOD. 8 reiterations to get it correct and we were all fatigued with it, mostly the committee. We spent the xtra time to preserve the volunteers interest and enthusiasm. I think we succeeded. And it was looking at State Statutes that completed the process. Thank you for the pointer.
GeorgeS21
(Florida)

Posts:1208


04/20/2019 11:03 AM  
I keep wondering - if committees didn't work for the BoD (serve at the pleasure), to who would they be accountable?
TeresaR4
(Arizona)

Posts:25


04/20/2019 11:12 AM  
Point well taken.
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