[CCWG-ACCT] A plea for time

[Malcolm Hutty]

On 2015-10-12 21:09, Greg Shatan wrote:
> Chris Dispain wrote:
>> The CCWG appears to be requiring a mechanism that allows the
>> community (in whatever guise we finally agree is acceptable) the
>> absolute final say. The right to step over the Board's fiduciary
>> duty without any check or balance in place to allow for the testing
>> of the Board's claim that acting would indeed be in breach of such
>> duty.
> 
> FOLLOW THE DECISION OF THE COMMUNITY.  WE DO HAVE TO LOOK FURTHER INTO
> THE BOUNDARIES AND OBLIGATIONS OF MEMBERS IN A MEMBERSHIP PUBLIC
> BENEFIT CORPORATION TO UNDERSTAND BETTER HOW TO AVOID A "ROGUE"
> MEMBERSHIP, BOTH AS A MATTER OF LAW AND AS A MATTER OF PROCESS.  FOR
> INSTANCE, THE ASSETS OF A PUBLIC BENEFIT CORPORATION ARE ALWAYS
> DEDICATED TO THE PUBLIC GOOD, AND CANNOT BE USED FOR PRIVATE OR
> PERSONAL GAIN; THIS APPLIES EQUALLY TO DECISIONS BY MEMBERSHIP AS IT
> DOES TO BOARD DECISIONS.  SIMILARLY, I DON'T BELIEVE THE
> MEMBERSHIP CAN CAUSE THE CORPORATION TO ACT IN A WAY THAT VIOLATES ITS
> ARTICLES OF INCORPORATION OR BYLAWS; THIS LIMITS MEMBERSHIP JUST AS
> MUCH AS IT DOES THE BOARD, "FIDUCIARY DUTY" OR NO.  FINALLY, WE COULD
> CONSIDER INSTITUTING A CONSULTATIVE PROCESS WHERE THE BOARD WOULD HAVE
> A LIMITED PERIOD OF TIME TO MAKE ITS CASE THAT IN EXERCISING ONE OF
> MEMBERSHIP'S POWERS (REMOVE/RECALL DIRECTORS, APPROVE/VETO BYLAWS,
> VETO BUDGET/STRAT PLAN/OP PLAN), THE MEMBERSHIP IS VIOLATING THE
> ARTICLES OR BYLAWS.

We're hearing a lot of wild claims about the member doing strange 
things,
but I don't see how they're connected with our proposals.

It's important to remember that our proposal doesn't empower the Single
Member to *cause* the corporation to do anything positive at all, other 
than
replace its directors - and the new directors would still have the same
fiduciary duty as those they replace. The other powers are all powers of
restraint. So this notion of the members distributing corporate assets 
is
completely without foundation: only the Board can do that; the Single
Member simply does not have the power to command the use of assets.

I've got a more general complaint too. The CCWG predicted in advance 
this problem
of vague and ill-defined criticism, and created a tool to resolve it 
into
something more constructive: stress tests. Through the mechanism of 
stress testing
we identify specific, concrete, comprehensible scenarios in which 
clearly
defined adverse outcomes might occur, including a justification of why 
those
outcomes are considered adverse. We can then use stress tests to check 
whether
our proposal adequately mitigates those risks.

We have tested our proposal against the 35 stress tests we have 
identified, and
it passes each one. This is powerful support for our proposal's 
viability.

Does the Board disagree with our evaluation of any of these stress 
tests? Which
ones, and in what way? If not, can the Board identify any new stress 
tests that we
should consider, adopting the same need for specificity in scenario 
construction?
Or if not the Board, then anyone else?

Clear answers to these questions would help drive our discussion forward 
in a
constructive manner, as Greg puts it "helping us to tighten the bolts on 
the car".
I think we would all welcome that.

If no credible scenario can be imagined that bears inspection when 
codified into
a stress test, then these vague accusations of "capture" "instability" 
and so forth
must be assumed to be, quite literally, unjustifiable.

Malcolm.

P.S. Greg: notwithstanding my comments above, great post.

-- 
             Malcolm Hutty | tel: +44 20 7645 3523
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