They are typically elected by member-directors, rather than members. The board of directors, including the general manager or CEO (chief executive officer), has very defined roles and responsibilities within the business organization. If the cooperative, after carefully considering the opportunity, decides against pursuing it, then it is proper for a director to take advantage of the opportunity. (d) A director is not liable for any action taken as a director, or any failure to take any action, if he (sic) performed the duties of his (sic) office in compliance with this section. Management runs the company and suggests strategy, but the board must develop and approve it. The role of the board of directors in strategic management is directly linked to the CEO’s role in the process. A person must act in good faith. While these terms are used often, it’s important not to diminish these duties, as they are the backbone of successful business planning.Board directors are much more than iconic figureheads. The court carefully looked at the time devoted to the decision, the complexity of the decision, the decision process itself, the amount of notice provided before the meeting, the availability of written information and data and the financial interests of the directors involved in the decision. Â Â The tradition of low or only symbolic compensation of cooperative directors can make it difficult to recruit outside directors. It is likely and even desirable that the board will have disagreement on a decision.Â A good board has diversity not only in composition but also in thought process.Â However, after amble debate the board must reach a decision.Â When a decision is made, the board has spoken and the board members should respect the majority decision.Â The board should expect that the CEO and the membership to respect a 5-4 vote exactly like a 9-0 vote.Â Board members should support the decision of the board outside the board room and attempt to speak with one voice.Â Even when a board member disagreed with the majority decision they should avoid sabotaging the board by suggesting to members that a decision was incorrect.Â Because of the value of acting as a unified board, many boards tries to reach unanimous decisions whenever possible.Â As one board member remarked, while it is important the we explore and discuss an issue from all sides, we try and reach a consensus opinion.Â If we canât come to a consensus on an important decision, that might be a indication that we havenât talked through it enough.â. The cooperative board of directors has the primary legal authority for the firm.Â Except for a few major decisions, which are specified in the Articles on Incorporation or Bylaws to require a vote of the membership, the board has top level decision control to oversee the corporation and ratify important decisions. A board member who is complacent, conforms to the majority or is essentially a ‘yes man’ cannot provide meaningful governance for an organization. A director is entitled to rely on information, reports, opinions or statements, including financial statements and other data prepared by an officer, employee or committee of the cooperative when the director reasonably believes that the source of the information is reliable and competent in the area. Other cooperatives have had a long experience with outside directors. Most cooperative elect directors for three year terms, although shorter and longer terms do existÂ A cooperative generally starts with staggered board terms so that only a portion of the directors are up for re-election each year.Â Some cooperative impose term limits, with 3 or 4 terms being a common maximum.Â Other cooperatives have age limits beyond which a director cannot be nominated for election.Â These structures create an automatic rotation which some view as creating a healthy turnover on the board.Â On the other hand, term limits and mandatory retirement can force experienced directors off of the board.Â In many cases it takes a new director 1-2 years to come up to speed on the cooperativeâs operations and activities.Â Excessively turnover reduces the effectiveness of the board.Â Some cooperatives use non-voting associate (junior) board members.Â The associate board structure gives potential board members the opportunity to sit in on meetings and even join in discussions.Â While there is no guarantee that the membership will elect a former associate member, they are often viewed favorably by the membership due to their experience and demonstrated commitment. In addition, the special characteristics of a cooperative business require that the directors be sensitive to the needs of the members and make sure the members are educated so that they can exercise their rights. However, there is an increasing tendency to also pay an annual retainer for time the a director spends on cooperative business that is difficult to specify, i.e communicating with members, keeping abreast of industry issues, preparing for board meetings, etc. Board of directors are shareholders of the company. The question of what circumstances are appropriate ones for indemnification is not always an easy one to determine. Board members are elected by the membership to oversee the cooperatives activities and to safeguard the memberâs investments.Â Because of this expectation, and their role as the top level governing body, serving on the board of directors comes with legal responsibilities.Â From a legal perspective the board of directors has three fundamental duties: Duty of Care which is taking the care and exercising the judgment that any reasonable and prudent person would exhibit in the process of making informed decisions, including acting in good faith consistent with what you as a member of the board truly believe is in the best interest of the organization. The duty of care that is required of directors is found in Section 8.30(a) of the Model Act (which is set forth fully above). Close monitoring of employees and committee work is also required. The âFiduciary Responsibilityâ of Boards. 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