Thursday, February 25, 2010

Co-op Attorney Addresses Member Insurance Inquiry

By John Severance

SOCORRO – Socorro Electric Cooperative member Don Steinnard addressed the co-op trustees on Feb. 9, asking for clarification of the bylaws and a 1967 resolution which addressed compensation and insurance for the Trustees.
According to Article 5, Section 7 of the Bylaws, “the sum of $15 plus insurance as compensation to be paid to each member of the Board of Trustees for each day or portion thereof spent on Cooperative Business.”
The resolution did not define the types of insurance compensation, however (both the $15 and insurance) were stated as the compensation to be paid on a per day basis. Steinnard pointed out that this was in conflict with the current “annual” insurance policies.
Steinnard requested the co-op attorney Dennis Francish to provide a response to the Board concerning his inquiries as to whether the Trustee compensation was in full compliance with the bylaws and the 1967 resolution.
Francish made his points known in a letter addressed to Trustee president Paul Bustamante, the board of trustees and Steinnard. And that letter also was obtained by the Mountain Mail.
In the letter, Francish said the resolution passed and became part of the SEC bylaws since 1967. Francish said the resolution has been undisturbed for the past 42 years (until 2009 District Member votes to change compensation), and no other member has ever complained about it.
As far as the resolution being ambiguous, Francish agreed, saying the resolution is definitely ambiguous.
Steinnard responded in an email: “I am still hopeful that it considers my first suggestion to commission an independent study to compare trustee compensation packages with other comparable member owned cooperatives It would appear that a rate of $15/day may be low, in view of inflation over the last 40 years.
“I do not know what is appropriate in regards to insurance compensation. As per my previous statement, I have no opinion on whether or not the current trustee compensation is appropriate. However, without proper information it is difficult for members to make an informed decision on compensation matters.”
Francish then asked the question are the SEC bylaws a contract? The attorney said yes and the bylaws were a contrct between the members and the cooperative.
The next question asked by the attorney was if any members cried foul or claimed breach of contract over the insurance provided board members since 1967.
“The answer is no,” Francish writes. “That is 42 annual meetings and more district meetings without member complaint or objection.”
Francish said the SEC staff should stop searching for more 1967 records to determine the intent of the membership who adopted the compensation resolution. “Any further search is a waste of time,” Francish said.
Steinnard agreed. “I am not an attorney, so I accept Mr. Francish’s opinion regarding the statute of limitations (a six-year statute that ran out in 1973,” Steinnard said. “However, it would have been interesting to know what the members really intended in 1967.”

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