In Mr. Smith Goes to Washington, the naïve Mr. Smith yields the Senate floor out of courtesy to a colleague, In doing so he loses his ability to debate on his legislation to prevent graft and corruption, Mr. Smith learned the hard way about the importance of knowing procedural rules. Officers and members of boards and and associations need to know the rules of order to achieve their goals and help their enterprises succeed. Our expertise includes:
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Call out the sheriff! Legislators on the lamb!
Madison, WI -- Wisconsin Republican Governor Scott Walker needs to balance the budget, and he wants to do it by cutting spending and eliminating certain collective bargaining procedures of various government unions. His budget bill is being taken up by the Wisconsin State Senate where Republicans hold the majority of 19 to 14. But, fiscal bills require a quorum of three-fifths (60%) of the Senate members or 19.8 rounded to 20. Democrats have fled the state of Wisconsin to prevent a vote from being taken that they know they will lose.
The State Republican Senator Scott Fitzgerald made a motion for a call of the Senate. The motion for a call of the house in general parliamentary procedure requires, if adopted, the Sergeant at Arms lock to the doors of the assembly, after which a roll call is taken to find out who is present and more importantly who is absent without excuse. Those who are absent without excuse can be arrested and brought to the assembly. Generally, legislative bodies are the only types of assemblies that have the power to enforce a motion for a call of the the house. The Wisconsin State Senate has this authority. So now, 14 Democrat Senators are on the lamb and generally believed to be in Illinois.
The last time I can remember this happening was in Texas in 2004 when the Texas legislature was about to take a vote on the redistricting plan put together by the Republican controlled legislature. The Democrat members of the Texas legislature fled to Louisiana to prevent a quorum from being present and thereby stalling the plan from being implemented. (Needless to say, if the plan were implemented Democrats stood to lose some seats.) The Texas Rangers gathered up a posse to round up the fleeing legislators. You can't help but chuckle at the thought of a posse of Texas Rangers on horses chasing down those delinquent legislators!
The mere fact that a motion for a call of the house exists says something about us humans and the lengths that we're willing to go to have our way. Back at our nation's founding, one of the charges against King George in the Declaration of Independence was that "HE has called together Legislative Bodies at Places unusual, uncomfortable, and distant from the Depository of their public Records, for the sole Purpose of fatiguing them into Compliance with his Measures." Of course this was considered unfair. I wonder what the founders would say of the actions of either of the Wisconsin Democrats or the Texas Democrats?
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In the News
Independence Hall, Philadelphia,PA is where the Second Continental Congress debated and passed the Declaration of Independence, and where the Constitutional Convention debated and adoped the U.S. Constitution.
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In Mr. Smith Goes to Washington, the naïve Mr. Smith yields the Senate floor out of courtesy to a colleague, In doing so he loses his ability to debate on his legislation to prevent graft and corruption, Mr. Smith learned the hard way about the importance of knowing procedural rules. Officers and members of boards and and associations need to know the rules of order to achieve their goals and help their enterprises succeed. Our expertise includes:
- Meeting and Session Governance Services
- Presiding Officer Services
- Delegate Convention or Assembly Services
- Strategic Procedural Planning Services
- Bylaw Drafting, Review, and Revision Services
- Written Opinions Services
- Training Programs
Does the fox guarding the hen house have a conflict of interest?
According to the Wall Street Journal (8 March and 10 March for article examples), United Continental Holdings (United; United Airlines is a subsidiary) is in a heated battle with two capital management companies, PAR Capital Management Inc. and Altimeter Capital Management LP, over United’s Board membership as PAR and Altimeter have expressed strong concern about United’s financial performance.
The Air Line Pilots Association (ALPA) and the International Association of Machinists (IAM) have chimed in with support for the current Board of Directors of United Continental Holdings Inc. and United CEO, Oscar Munoz. Interestingly, both ALPA and IAM are unions and have one member each on the 15-member Board of Directors. An emerging but untested trend in corporate governance is allowing union membership a seat on the board of directors.
Some believe that giving unions a “seat at the table” will prevent negotiating battles, strikes, and other labor strife within industries. Union members on boards, however, have a strong and direct conflict of interest which is a primary concern of investors who seek strong returns for their investments.
In general terms a board of directors has fiduciary responsibilities of due care and loyalty to oversee the operation of an organization consistent with the organization's objectives, policies, and directives as decided by the members of the organization. Board members have an ethical obligation to abstain from voting on matters with which they are involved personally and uniquely associated with. Robert’s Rules of Order puts it this way:
“No member should vote on a question in which he has a direct personal or pecuniary interest not common to other members of the organization. For example, if a motion proposes that the organization enter into a contract with a commercial firm of which a member of the organization is an officer and from which contract he would derive personal pecuniary profit, the member should abstain from voting on the motion. However, no member can be compelled to refrain from voting in such circumstances.” p. 407.
Union leaders have a direct pecuniary interest in any policy discussion that would impact union membership and that interest is not common to other board members of a corporation. The conflict is clear. Further, the company in question loses negotiating capabilities and open and transparent debate on labor issues when a member of the Union is at the table.
In the case of United, PAR and Altimeter have expressed concerns of performance and shareholder value for some time. They may clearly have in mind cost cutting, layoffs, and the like. Labor union leaders of ALPA and IAM would not favor layoffs as that would affect their members regardless of whether layoffs would improve performance or shareholder value. Not only is this a conflict of interest, but it also interferes with a director’s duty of care and loyalty.
The only way to avoid this conflict, aside from prohibiting labor union members from boards, is to establish policies surrounding abstentions and participation in debate on matters where such conflicts exist and in regard to executive session participation.
In the News
Independence Hall, Philadelphia,PA is where the Second Continental Congress debated and passed the Declaration of Independence, and where the Constitutional Convention debated and adoped the U.S. Constitution.
