Bid to update Mountain Equipment Co-op board election rules sparks debate

A faction of Mountain Equipment Co-op members is rallying against a move to reform the leadership-election rules of the outdoor retail chain, founded in Vancouver 40 years ago.

The debate centres on an effort by the MEC board of directors to secure more control over selecting which candidates can stand for election to the organization’s nine-member board.

A special resolution introduced by the board, and up for a vote by MEC members until the end of March, seeks to update the candidate-nomination process.

The change would enable a board committee to determine the criteria for suitable board directors, select the list of official candidates, and reject undesirable nominees. MEC members would still elect the directors.

Opponents of the special resolution argue the new rules would diminish the democratic role of MEC’s millions of member-owners—mostly customers of the retailer in Canada.

Critics also fear the change could limit the ballot options, stifle diverse representation, and potentially open the door to directors filling the board with people with shared views.

More than 260 people have added their names to an online open letter opposed to the board’s special resolution. They include Vancouver lawyer David Eby, former Senate page Brigette DePape, and Toronto activist Judy Rebick.

“It doesn't set a good example for how a member-owned co-op should be run. And it doesn't allow the people who are best able to decide who they would like to be represented by to choose their own representatives,” reads the letter, posted online last week.

“Instead, it replaces the desires of members with the desires of the board, and it downgrades members from active participants in the co-op to mere consumers of its products.”

For their part, MEC officials argue the existing candidate-nomination rules are behind the times for a $265-million-a-year business with around 1,500 employees.

They argue the new rules are intended to help ensure members can vote for a list of well-qualified board candidates.

“With a balanced ballot before them, members will decide which candidates are the most qualified to lead MEC,” reads a document about the special resolution on the MEC website.

“MEC will benefit from strong Board leadership that is responsive to members’ diverse interests and in keeping with the size and scope of the business at hand,” it reads.

MEC members can vote on the special resolution by phone and online until March 29 as part of annual board elections.

If approved, the new rules would come into effect for the elections in 2013.

Mark Latham, a long-time MEC member from Vancouver, is opposed to the special resolution. He said the proposal would take too much power away from the members.

“They haven’t been doing this, but I wouldn’t mind if the board gave its opinion and said, ‘We think these five candidates are great and these other five are terrible.’ That’s fine by me. But we should be able to vote for the terrible ones if we want, if we think they’re not terrible,” Latham told the Straight by phone.

MEC spokesperson Tim Southam said the board concluded the existing nominations process does not address the leadership needs of such a large and complex business.

“I think there’s a growing recognition among co-operatives, just as there is among corporations, that governance processes…need to be bolstered,” Southam told the Straight by phone.

“A lot of this attention has come to light since 2008 and the meltdown in the global economy. But co-ops, like other organizations, have been called upon to improve their governance practices such that they are placing responsibility with boards to ensure that they are in fact attracting qualified people to lead these organizations,” he said.

Founded in Vancouver in 1971, MEC has 15 stores across Canada and 3.6 million members who are customers and part-owners of the organization.

Comments (14) Add New Comment
Mark Latham
The global financial meltdown was largely caused by a lack of accountability of elected leaders to voters, in corporations and in governments. The Special Resolution would diminish that accountability at MEC. It is not a governance improvement, nor an update, nor a reform -- rather, the opposite. I say this as a specialist in finance and governance (http://linkedin.com/in/marklatham). For a proposal for actual reform at MEC, please see http://votermedia.blogspot.ca/2012/03/how-i-plan-to-vote-in-mountain.html
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Rick in Richmond
Vancity is doing the very same. Check it out.
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Sounds like consolidation of power
I guess I ought to look into this before March 29.

We've let the democratic process of the country coast along (as I've been content to do with MEC and VanCity elections), and look where it's gotten us.

*sigh*

Okay, I've read the board's 2 page PDF on why they think the change is necessary, and I didn't see any concrete problems they're trying to solve.

They will have the ability to recruit qualified candidates (themselves?), but it seems they don't mention being specifically able to reject candidates that they feel are unqualified.

Why the avoidance?

I have to agree with Mark Latham from the story:

I wouldn’t mind if the board gave its opinion and said, ‘We think these five candidates are great and these other five are terrible.’


Yeah, what the hell's wrong with that?
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Darcy McGee
MEC should have lost its co-op status years ago. It's a joke. Don Cayo wrote eloquently about it in the Vancouver Sun, with specific numbers related to the taxes they remit. It's essentially unfair competition.
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S. Grant
MEC is not a financial institution, unlike VanCity. MEC's management are supposed to provide the needed business expertise.

As MEC's board controls all communications with MEC members, it is inexcusable for MEC to publicize only arguments favouring this change and nothing about why it may be a bad idea. "Progressive" MEC could have set up an online discussion site for the members 20 years ago. This lopsided promotion may be grounds for a member grievance if the resolution passes.

This change would appear to conflict with MEC's Rule 10.17, which states:

10.17 "The Co-operative, and its employees, agents, contractors, suppliers, directors, officers, election auditor and nominations committee, must not endorse or indicate preference for any candidate."

The board has said nothing about Rule 10.17.

Presumably a member barred from running could also demand a grievance procedure. If the member won, what would that do to the election results?

All in all, MEC members should vote against this proposal, and consider whether they should reelect incumbent or recent directors.

At the same time it wants to cull board candidates, MEC is polling the members to increase director remuneration by 50% to 100%.
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S. Grant
@ Sounds like consolidation of power

The reason MEC adopted Rule 10.17 back in the '80's was that a majority of members felt the board was abusing the use of endorsements to defeat certain candidates. As long as the board controls inter-member communication, the board should have no such power.
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Wendy Holm
In a cooperative, members decide who should represent them at the governance table (Board) based on the qualifications of the members standing before them for election, not on the say so of a handful of members who happen to be on the Board. International Cooperative Principle # 2: Democratic Member Control is fundamental to co-op democracy and governance.
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S. Grant
The board's responsibility is leadership and vision. The management is supposed to provide the business expertise.

The CEO is the interface between the board (representing the members) and the employees. The board hires, reviews, and can fire the CEO. The board is perfectly free engage management consulting firms to assist in CEO succession matters. In fact, the board has done this in the past.

The board has a variety of committees, such as the nominations committee and the finance committee. The board can place on any committee, MEC members who are not directors. (Non members may also be able to sit on MEC board committees.) Thus, if MEC finds it lacks expertise on the board in any given area, it is free to appoint to committees non-directors with the needed skills. This has been done in the past. For instance, I was asked to sit on the finance committee during a time when I was not a director.

The facts of engaging management consulting companies and having non-directors sit on committees completely undermine any excuse that the proposed resolution is needed to ensure a board with particular skillsets.
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Sounds like consolidation of power
@S. Grant

Thanks for the insightful & informative posts!

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hg
If you are a MEC member, just vote vote no.It clearly is undemocratic and driven by people, that consider themselves superior. MEC is a co-op.
hg
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stephen elliott-buckley
i'm voting no. stifling democracy is not ok.
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Mark Latham
Vancity credit union members are now facing issues similar to this MEC situation -- see blog post http://votermedia.blogspot.ca/2012/04/vancity-credit-union-election-who-...
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Mark Latham
Here's a report on the MEC AGM, including voting results, and quotes of the deceptive language that fooled members into supporting the Special Resolution:
http://votermedia.blogspot.ca/2012/04/mountain-equipment-co-op-agm-democ...
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K. Gustav
S. Grant,

You are misleading people by stating that the Board can simply hire management consultants, as if management consultants are perfect. The big four make lots of mistakes and their opinoins and advice have led to disaster in many places, Enron, Nortel, Dell etc... They are not the solution everytime. Sometimes you need experienced business people who actually have led large organizations at the Board table, those with a few battle scars with real insight.

Secondly the Board provides leadership, guidance and menotorship. Hard to do that if you have no experience in complex, large organizations. Senior management in many organizations look up to the Board for their experience and insight. Afterall management could as easily hire the same management consultants.

Third the Board is ultimetly responsible to the members for the performance of the organization. It hires the CEO and then assesses him/her and his/her team on performance. In order for the Board to perform these duties they have to have some credibility and that is not achieved via inexperienced BOD members.

Further there is lots of discussion about democracy, do any of you know how many members actually vote, that is the biggest threat to democracy. With less than 1% of the members voting, those that are running needed to all be effective since an election can easily be swayed with such a horrible turn out.

The very fact that less than 1% of members vote could be a democractic sign of approval of where MEC is heading. From a product, process and governance perspective.

Finally the discussion really should be about what directors current and future are best suited to see MEC succeed in a retail space that is becoming more competitve with foreign big box stores. If all us still want to get great valued gear from an organization that is defined as bringing gear to its members in the most effecient (i.e. smallest impact on the environment at the best value propostion), then this should be the focus of the discussion. Not some academic discussion about democracy when less than 1% of members vote. Stay focused on the objective ... helping Canadians get active and connected to our beautiful outdoors ... back country, front country or urban. Bike, swim, hike, run, paddle, walk.... Stay active, stay healthy and engaged with the environment and its beauty
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