TRUSTEES’ FIDUCIARY DUTIES
Each Trustee on the Board owes certain fiduciary duties to PCC and its membership when fulfilling his/her/their responsibilities as a Trustee. Those duties are:
- To act with care, which requires that a Trustee’s decision-making be on an informed basis, after examining all relevant materials and presented assumptions, asking questions and, where necessary, engaging experts to assist in evaluating courses of action
- To act with loyalty, which requires that a Trustee act in good faith and in the best interests of PCC and its membership, rather than in the Trustee’s own interests or in the interests of friends, family members or other organizations with which the Trustee is affiliated, whether within or outside PCC. Integral in the duty of loyalty is the obligation to disclose and avoid conflicts of interest, as described below under Trustee Eligibility, that could influence the independence of a Trustee’s decision-making on behalf of PCC.
- To maintain the confidentiality of PCC’s and others’ confidential information presented to the Board for review and consideration.
TRUSTEE ELIGIBILITY
To be eligible to serve on the PCC Board, Trustees must:
- Have sufficient time, interest and attention to perform the duties of a Trustee as they unfold over the course of the Trustee’s term
- Provide timely and candid disclosure of circumstances, including any potential conflict of interest (as described below), that may impact the Trustee’s eligibility for or ability to serve as a Trustee
- Meet the eligibility criteria laid out in the PCC Bylaws
- Meet the criteria laid out in the Board’s Eligibility Criteria
Trustees may be ineligible to serve if they fall into one of the categories identified in the Board Eligibility Criteria. Determinations of ineligibility are made by the Governance and Membership Committee described below.
In keeping with recognized best practices for organization governance, the Board’s Eligibility Criteria also establish that at least two-thirds of the total number of Trustees on the Board must be independent – that is, without any conflict of interest arising from personal or financial relationships or organizational affiliations that could influence a Trustee to make decisions not in PCC’s best interests. This would also result in a breach of the Trustee’s duty of loyalty outlined above. Examples of relationships that cause or could appear to cause conflicts of interest include:
- membership in or affiliation with any organization seeking financial or other concessions or commitments from PCC
- employment with or a financial stake in vendors, service providers or suppliers of PCC
- a personal/family relationship with any of the foregoing
Under Washington law and PCC’s Bylaws, Trustees have an obligation to:
- promptly disclose the existence of potential or actual conflicts of interest and
- avoid involvement in discussions or decision-making associated with the conflict of interest.
Even though some conflicts of interest can be managed effectively, all conflicts of interest place burdens on a board and could undermine members’ and other stakeholders’ confidence in the decision-making of the Board. For those reasons, conflicts should be avoided.
BOARD RESPONSIBILITIES
The Board’s responsibilities are broad and comprehensive. They include the following:
Strategic Planning and Financial Oversight. Key among the Board’s duties are oversight of PCC’s annual and long-range strategic planning and actual co-op performance, evaluation of actual performance to planned goals and the approval of corrective actions where necessary. The Board sets strategic goals encompassing PCC’s “triple bottom line” of (1) financial performance (including new store growth), (2) social contributions and (3) environmental stewardship. The Board reviews, comments on and approves PCC’s annual operating budget and capital spending plans (for new stores, facility upgrades, remodels and new technology), and monitors actual spending and performance in relation to those budgets and plans.
Risk Management Oversight. The Board oversees PCC’s identification of potential financial, operational and reputational risks and the plans to minimize those risks. This includes hiring and oversight of PCC’s independent auditors, who provide an annual audit of PCC’s financial statements. It also includes oversight of PCC’s cybersecurity programs, insurance programs, crisis management and disaster recovery plans.
Social and Environmental Performance. The Board reviews and approves programs to further PCC’s social and environmental goals and monitors PCC’s achievement of such goals. These programs can be as diverse as product standards for endangered seafood, sustainable building programs, and grants to preserve organic farming or to promote food access.
Compensation and Benefits Management. The Board establishes and regularly reviews PCC’s compensation philosophy and compensation programs to maintain PCC’s competitiveness in the Puget Sound region in attracting and retaining competent and engaged staff. The Board also oversees the structure and proper administration of PCC’s staff benefit plans (such as medical/dental coverage, retirement plans and staff discount programs) and reviews and approves key compensation provisions of PCC’s collective bargaining (union) agreements.
Management of Membership Programs. The Board investigates, evaluates and approves major membership programs that are financially sustainable. The recently instituted PCC Member Dividend Program and the [Surprise and Delight] promotions are examples of these programs. The goals of membership programs are to encourage growth in membership, to acknowledge the vital role of members in the success of the co-op venture, and to return to members a portion of PCC’s annual profits, in accordance with cooperative values. The Board yearly determines the amount of members’ annual dividends based on PCC’s financial performance for the year just ended.
Hiring, Supporting and Evaluating the Senior Team. One of the Board’s important duties is encompassed in its relationship with PCC’s President and Chief Executive Officer (CEO), who is accountable for managing all aspects of PCC’s business. The Board is responsible for hiring, supporting, and evaluating the performance of PCC’s CEO, and, when necessary, terminating the CEO’s employment. The CEO is responsible for recruiting, hiring and evaluating PCC’s other executive officers, with Board involvement with respect to the Chief Financial Officer, the Vice President of Human Resources, and the General Counsel. PCC’s mission, values and culture are front and center in all of the Board’s work, but especially when hiring and evaluating the CEO and key co-op officers.
Co-op and Board Governance. The Board creates and regularly evaluates the policies and processes for the governance of PCC and the Board, including the composition and responsibilities of the various Board committees discussed below. The Board establishes and reviews Trustee eligibility criteria, based upon the fiduciary duties outlined above. The Board annually evaluates the effectiveness of the Board and Trustees and takes action to correct any identified deficiencies. The Board monitors potential Trustee or staff conflicts of interest that could negatively impact decision-making in the best interests of PCC and takes action where appropriate to address such conflicts.
Recruitment of Qualified Trustees. The Board has an obligation to provide competent guidance to PCC management and oversight of PCC’s business. To ensure the continuity of effective guidance of PCC’s business, the Board regularly identifies and recruits potential qualified candidates for Trustee. Integral to its recruitment efforts is the Board’s annual evaluation of the then-current skills, experience or diversity of background on the Board, such as executive-level leadership, financial, merchandising or marketing skills, and identification of missing skills, experience and diversity deemed critical to provide effective future leadership. The Board then targets its recruitment efforts to qualified candidates who can provide the identified skills, experience or diversity and a willingness to serve.
Board Committees
Under good corporate governance practices, boards typically create standing committees to which they delegate responsibility for review of specific areas of the business’s operations, such as financial planning or compensation and benefits structure. PCC’s Board delegates some of its responsibilities to standing committees of the Board, which conduct in-depth reviews of their delegated areas and report back to the Board on recommended courses of action. The Board assigns Trustees to participate on particular committees based on the Trustees’ expertise and experience. Current standing committees and their areas of responsibilities are:
- The Executive Committee (EC) – is composed of the chairs of each committee and the current Board chairperson and acts (i) to coordinate and integrate the work of the respective committees and (ii) as a sounding board for the CEO between scheduled Board meetings.
- The Audit and Finance Committee (AFC) – oversees PCC’s auditors, strategic plans, budgets and performance, borrowings, new store and facility sites and economic terms and PCC’s risk management plans. AFC members have backgrounds in finance, business operations and real estate, and must be able to understand and question complex financial statements, long-range projections, projected rates of return, retail leasing transactions, financial audit results and risk management evaluations.
- The Governance and Membership Committee (GMC) – creates and maintains PCC’s governance practices, handles the process of identifying missing skills/expertise on the Board and identifies and recruits qualified candidates to stand for election as trustees, oversees PCC policies on members, conducts evaluations of the Board’s and trustees’ effectiveness and oversees potential conflicts of interest of PCC’s Board and management. GMC members have backgrounds in business and board governance, recruitment of qualified candidates and legal expertise, and must be able to draft and evaluate corporate governance policies; provide unbiased evaluations of Board and Trustee effectiveness; and contribute to the identification and recruitment of highly qualified Trustee candidates.
- The Management Development and Compensation Committee (MDCC) – oversees PCC’s compensation policies and programs, benefit plans, and hiring and evaluation of the CEO. MDCC members have backgrounds in Human Resources, benefit plan design, compensation theory and systems, and finance. Committee members must be able to evaluate complex benefit and compensation plans in the context of achieving PCC’s mission and operational goals and provide unbiased evaluations of the performance of senior leaders.
Read each committee’s charter by clicking the links below:
Meetings of the Board and Committee
The Board of Trustees has regularly scheduled all-day meetings typically four to five times per year and an annual two-day strategic planning meeting with PCC senior management. Trustees may also be called upon to meet in specially scheduled meetings for consideration of time sensitive matters. Committees of the Board meet more frequently, with the number of meetings dependent on the committee and its work plan for the year.
Prior to each Board and committee meeting, PCC’s senior management prepares extensive materials to:
- educate Trustees on topics such as
- emerging trends in the grocery industry,
- new product developments, or
- social or environmental matters of PCC
- current status of operations
- financial position
- potential growth opportunities and challenges
- achievement of strategic goals
Trustees are expected to dedicate considerable time to review all the materials provided in advance of the meetings and come prepared with questions or concerns, to ensure full and meaningful deliberations on matters of concern to PCC.