Wow, proxy votes are a hot topic! I had more feedback on my monthly ethics column than usual. Apparently many organizations worry about the potential misuse of proxies at annual general meetings, and many people in the community benefit sector have had bad experiences with proxies.
You’ll find my column at http://www.charityvillage.com/cv/archive/aeth/aeth10/aeth1002.asp. It is published on the first Monday of each month, and you will find online archives dating back to 2003. While you are on that site, sign up free for the weekly Village Vibes e-newsletter! It’s a great source of news for Canadian organizations, and helpful advice and ideas for organizations anywhere.
Here’s what the anonymous questioner (I get the questions relayed through Charity Village, without any identifying data) said after seeing the column:
“Thanks very much, the answer was thorough and very much appreciated by the Board.”
I love getting feedback from the originator! Your comments and column ideas are welcome too. I hope to get even more comments once Charity Village carries out its plan to allow comments to be directly posted on the site.
By the way, the column dealt only with proxy voting at members’ meetings. I simply don’t see any ethical dilemma about using proxies at board meetings. The answer should always be no. That makes for a rather short column.
It is sometimes illegal (for example, if your organization is incorporated under the Canada Corporations Act), the lawyers tell me. And if there was a lawsuit, have you checked how your provider of your Directors and Officers insurance would react to covering a voter who wasn’t on the D&O insurance list as a director and officer? Or to covering others if that non-director swayed a critical vote?
And generally, anyone who is not a regular participant at board meetings, and fully informed about the issues and the organization’s status, simply cannot properly carry out a director’s duty of care. Most issues that come to a board require an understanding of the Vision, Values and Mission statements, the strategic plan and its status, the financial situation, the risk management approach and current issues, the relationship with stakeholders, and more. A quick briefing isn’t going to be anywhere close to adequate, and bringing someone up to speed at a board meeting is a poor use of group time.
Letting another director carry a proxy isn’t a good alternative either, in my opinion, as that concentrates more power in one individual than a nonprofit director should have. But if you feel differently, let me know!
I completely agree that chronically absent directors should be bounced off the board, but how about a situation where a board member must miss an important vote due to unavoidable circumstances.
How would you feel about a proxy being given to another director, accompanied by specific voting instructions?
By: Doug Jamieson on February 12, 2010
at 9:58 am
I would be dead against it, and question its legality. The voting instructions would have been given in advance of hearing the discussion, in which the comments of other directors might have changed the mind of the absent director. Votes need to follow a discussion which every voter can hear and participate in.
I strongly suggest that boards authorize teleconference participation, which reduces the need to miss an important vote.
A further thought – if the result of an important vote is going to be affected by a single vote, then the issue has likely not been discussed and clarified enough to hold the vote at all. Some boards have a policy that significant votes require a consensus level of two-thirds or three quarters.
By: Jane Garthson on February 12, 2010
at 10:08 am