BOARD OF TRUSTEES

 

INDEPENDENCE, NONCOMPETITION AND OTHER ELIGIBILITY CRITERIA

It is vitally important to PCC that Trustees form their own objective judgments about what actions are in the best interests of PCC and our members. Section 3.3 of the Bylaws provides that in order to be eligible to serve as a Trustee, a person must satisfy certain independence, non-competition and other reasonable eligibility requirements adopted by the Board.
To help ensure that Board decision-making is not influenced by considerations other than what is in the best interests of PCC and our members and to reduce the possibility of the appearance of impropriety in Board deliberations, the Governance and Membership Committee of the Board recommended and the Board adopted, at the February 7, 2019 Board meeting, a series of independence, non-competition and other eligibility criteria (the “Independence Standards”), to be effective immediately.
The Independence Standards outline that while non-independent persons are not prohibited from sitting on the Board, at least two-thirds of the trustees must be independent. The Independence Standards define the following individuals and parties related to them as not independent: current PCC employees or vendors and those who, within the last three years, were officers of, worked on financial audits for or received a charitable grant of a certain size from PCC. The Standards also specify that persons owning or working for competitors to PCC, partners in audit firms engaged in financial auditing for PCC, as well as those having political influence over PCC are not eligible to be PCC Trustees. Finally, the Standards clarify that any current employee of PCC serving on the Board cannot sit on standing committees of the Board and, other than the CEO, cannot participate in discussions regarding terms of employment, compensation or benefits for employees.

Background

PCC’s Bylaws specify that to be eligible to serve as a Trustee, an individual must:

(a) satisfy certain independence standards, noncompetition provisions and other reasonable eligibility requirements prescribed by the Board;

(b) be an Active Member (as defined in the Bylaws) of PCC,

(c) be at least 21 years old, and

(d) not be prohibited to serve by term limits imposed by the Bylaws.

Section 3.3 of the Bylaws further limits the number of employees, or Related Persons (as defined below) eligible for election or appointment as a Trustee at any one time to
no more than two PCC employees or Related Persons. For purposes of the foregoing, the Bylaws define a “Related Person” as a spouse, child, grandchild, sibling, parent or any individual, other than a tenant or employee, sharing the household of the employee.

Section 2: Members

While the Board does not intend to prohibit all nonindependent persons from sitting on the Board, the Board intends that not less than two-thirds of the Trustees shall be independent. In addition, as specified in Other Eligibility Restrictions below, eligibility for certain Board committee positions may be restricted only to independent Trustees. The Board deems the following individuals not independent:

A. Current PCC Employees:

A current PCC employee is deemed not independent.

B. Vendors:

An employee or person controlling or owning 5% or more of the equity in an entity that currently supplies PCC with goods or services (a “Vendor”) is deemed not independent.

C. Former PCC Employees:

A former employee of PCC is deemed not independent if he/she (or a Related Person) was an officer of PCC within the three years prior to proposed election or appointment.

D. Auditors:

An individual is deemed not independent if he/she (or a Related Person) has worked on any PCC audit engagement within the three years prior to proposed election or appointment.

E. Charitable Grant Recipient:

An individual is deemed not independent if he/she (or a Related Person) is an employee, officer or director of an organization that has received within the past three years or receives during the individual’s term on the PCC Board, a charitable grant or donation of $25,000 or more from PCC.

Noncompetition Criteria

The Board will deem an individual not eligible to serve as a Trustee if he/she (or a Related Person):

1.  is an employee, officer, or director of any entity engaged in a business now or in the future competitive to that of PCC in any region or state in which PCC operates stores or does business (a “Competitor”); or

2. holds an ownership interest of greater than 5% in any Competitor or in any entity that controls, is controlled by or under common control with a Competitor.

An individual already appointed or elected as a Trustee who later is deemed ineligible under the Noncompetition Criteria shall promptly tender his/her resignation to the Chairperson of the Board when requested.

Other Eligibility Criteria

The Board will deem an individual to be ineligible to serve as a Trustee if:

1. He/she (or a Related Person) has any political influence over PCC as an elected official, a political candidate, or as a leader of a politically affiliated organization;
2. He/she is a current partner of any firm providing financial auditing services to PCC, whether or not such individual works on the PCC engagement; or
3. He/she (or a Related Person) is a current employee and his/her service on the Board will cause the Board to exceed the limits on the number of serving employees as set forth in Section 3.3 of the Bylaws.

Current Employees

The Board will deem an individual or any Related Person who is a current employee of PCC, other than the President/CEO, to be ineligible:

1. To serve on any standing committee of the Board; and
2. To participate in (and such person shall recuse him/herself from) any Board or committee discussions related to:
(a) employees’ compensation or bonuses in general, or specific employees’ terms of employment, compensation or bonuses;
(b) CEO terms of employment or compensation or bonuses; or
(c) the results of the PCC annual financial audit.

The Board will deem the current President/CEO of PCC, if serving on the Board, to be ineligible:

1. To serve on any standing committee of the Board; and
2. To participate in (and such person shall recuse him/herself from) any Board or committee discussions related to CEO terms of employment or compensation or bonuses.