11/30/2015

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Honest Weight Food Cooperative

Special Membership Meeting

November 30, 2015

Welcome

We urge you to please listen to our presentation before completing your ballots.

We’re all here today because we love our co-op.

Unfortunately, our Board of Directors has acted beyond the scope of its authority.

Once we looked further into their actions, we uncovered unsettling patterns and misrepresentations.

Honest Weight has had a relationship with Cooperative Development Services Consulting

(CDS) since December 2009.

CDS promotes “Policy Governance.”

Policy Governance was originally developed for corporations to solidify control and governance in the hands of the Board and the CEO, away from employees.

-http://www.carvergovernance.com/model.htm

Policy Governance is hierarchical and is not well-suited for democratically-run organizations like co-ops. It allows only minimal staff or member participation.

Honest Weight has spent tens of thousands of dollars on CDS and Policy Governance.

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“Two keys to sound board process are the ability to speak with one voice and the ability to protect confidential information.”

-Thane Joyal, CDS Consultant,

“Field Guide to Board Discipline,” librarycdsconsulting.coop

“To ensure absolute loyalty, board members are required to sign a code-of-conduct agreement (template provided by CDS); violating

the code by speaking out against a board decision, for example, is forbidden: the board member must resign.”

-Mimi Yahn, “Still Searching for Democracy at the Putney Co-op,”www.commonsnews.org

Many CDS co-ops are suffering underPolicy Governance.

“The immediate issue that led to this rift was a request by some employees to speak with (the two of) us in confidence, which we

honored. We made it clear…we were present only as individuals, not representing the board…

[T]he majority of the board felt that listening without the board’s prior approval was violation of the board’s “speak-with-one-

voice” policy, despite the employees’ request for confidentiality.” – Tom Franks, former Board member, Brattleboro Co-op,

www.ibrattleboro.com, July 15, 2014

An open resignation letter from a Board member to Brattleboro Food Co-op shareholders shows Policy Governance in action:

“In Portland, Oregon, another CDS client, Peoples Food Co-op, was the subject of a 2005 Portland Indymedia report following the firing of a dissenting worker opposed to the decisions being made to ‘corporatize the co-op.’ ”

- Mimi Yahn, “Searching for Democracy at the Putney Co-op,”

http://vtdigger.org/2015/02/04/mimi-yahn-searching-democracy-putney-co-op/

According to the report, CDS “is pushing the Policy Governance model on Coop boards. In effect, this board policy mandates that the board divorce themselves from the community, and only deal with the general manager, while refusing to hear the concerns of workers. …[M]anagement does what they want with the Coop and employees. … When workers voice concerns, they get fired. [T]he board [uses] Policy Governance as an excuse to not hold management accountable to the community.”

http://portland.indymedia.org/en/2006/07/342631.shtml

CDS consultants routinely criticize member labor programs (MLP) because they claim “member labor is more expensive and less efficient” than hiring employees.

- Dave Gutknecht, CDS Consultant,

“Who Benefits From Co-op Member Labor,” Cooperative Grocer Magazine, 1991

These are some of the CDS co-ops that have ended member labor programs by

inciting fears about their legality.

Syracuse Real Food Coop East End Food Coop, Pittsburgh

Lexington Co-op, Buffalo

City Market/Onion River, Burlington Harvest Co-ops, Boston Food Conspiracy, Tucson

CDS co-ops repeatedly told their members they were:

• Violating the Fair Labor Standards Act• Acting based on a Department of Labor

(1997 US DOL opinion) letter

Honest Weight told us the same:

“Leaders of the co-op said they feared being vulnerable to charges of violating minimum wage laws, though a state Labor Department spokesman said Wednesday no co-op in the state has ever been cited for such a violation.”

- Tim O’Brien, reporter, Times Union, 11/25/15

http://www.timesunion.com/local/article/Co-op-coup-Turmoil-at-Honest-Weight-Food-Co-Op-6657467.php

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East End Food Co-op in Pittsburgh, a CDS client, ended their member labor program last year in a process that sounds strikingly similar to ours:

“The [board] wanted to limit and cap liability by acting in good faith, in the event that the Department of Labor (DOL) was to cite us.”

“I was outraged when I picked up the paper and read the news about the program ending. I thought, “How could this happen without me knowing?”

-Notes from East End Food Co-operative, November 6, 2014

We want to be clear that despite the decision that a majority of the Board felt compelled to make on October 20 to end the member labor on the floor and in the administrative offices of the store by January 1, 2016, no one on the Board wants to end any portion of

the current member labor program if there is any way that it can be found to be compliant with the law. We will leave no stone unturned in this effort and we welcome information or assistance from anyone who might be helpful.

November 3, 2015

November 19, 2015

We believed that such public coverage could jeopardize our ability to negotiate with the DOL to protect and preserve the MLP to the extent possible.

The transition away from members contributing labor has also raised significant and serious organizational, governance and cultural issues for Honest Weight… while the transition has been and will be very difficult for its

members …, Honest Weight’s Board of Directors has directed Honest Weight’s management team to commence the transition with all deliberate speed.

October 24, 2015

“Fresh Start Bylaws Template Guide

Article III: Member Meetings

3.2 Special Meetings. Special meetings of the membership may be called by the Board, either by decision of the Board or in response to a written petition of 5% of the active members…

Decisions made at any special meeting are advisory only.”

-http://library.cdsconsulting.coop/doc/fresh-start-bylaws-template/

Putney Food Co-op, another CDS client in Putney, Vermont, just lost its fight to keep their Board from adopting CDS’s Fresh Start Bylaws. The

members were mislead by the Board. Now, aside from voting for Board members and on the annual budget, THEY HAVE NO VOICE.

We are fighting to keep this from happening at Honest Weight.

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Will we be next? Only your vote can prevent this from happening.

Voting

Casting your Ballots

5 ballots

Ballot #1: Because the Board has since rescinded their decision, this will be an Advisory Vote.

“DISAPPROVE Board Decision” would disapprove the original board decision to end member labor on the floor and administration.

“APPROVE Board Decision” would approve the original board decision.

Choose One:

[ ] DISAPPROVE Board Decision[ ] APPROVE Board Decision Ballot

Ballot #2:

Election to determine the removal of each Director from the Board of Directors

VOTE NAME OF DIRECTOR

[ ] Remove [ ] Retain Deborah Dennis

(acting president)

[ ] Remove [ ] Retain Leif Hartmark

(treasurer)

[ ] Remove [ ] Retain Rossana Coto-Batres

[ ] Remove [ ] Retain Ned Depew

[ ] Remove [ ] Retain Bill Frye

[ ] Remove [ ] Retain Roman Kuchera

[ ] Remove [ ] Retain Daniel Morrissey

NOTE: Dual Voting Marks for any Director or No Voting Mark for any Director

shall count as Non-Votes for purposes of establishing the percentage

Ballot #3: Election to fill unexpired terms on the Board of Directors

Vote for NO MORE than 9 Candidates

VOTE CANDIDATE

[ ] Rebekah Rice

[ ] Nate Horwitz

[ ] Kate Doyle

[ ] Rebecca Tell

[ ] Carolynn Presser

[ ] Nickleson Cook

[ ] Christopher Gockley

[ ] Howard Brent

[ ] Elizabeth Loparco

[ ] John Serio

[ ] Timothy Corrigan

[ ] Andrew Lu

[ ] _________________________________________

[ ] _________________________________________

Ballot #4: Consider a different Management Structure. This will be an

Advisory Vote.

A vote of YES means the Board of Directors may consider a different

management system than that in place at the present time and in its sole discretion,

but should make such evaluation on an annual basis and then share its conclusions

with the Membership.

A vote of NO means that the Board of Directors is not encouraged to make such

an evaluation for any change to the management structure at the present time.

[ ]YES Board may consider a different management

structure

[ ]NO Board is not encouraged to consider a different

management structure

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Ballot #5: Vote on a finding of no confidence in the members of the leadership team. This will be an Advisory Vote.

A vote to CHANGE means that the Board should reconsider its continuing support of the three-member Leadership Team as the management structure to operate the HWFC.

A vote to KEEP means that the membership is satisfied with the Board’s ongoing decision to keep the three-member Leadership Team in place to operate the HWFC.

CHOOSE ONE:

[ ] CHANGE – Reconsider Leadership Team [ ] KEEP – Keep the Leadership Team

Notice Of Charges against ____________, a Board Member of the HWFC Board of Directors, as Required by Bylaws Section 415.2 and Cooperative Corporations Law, Section 63, Seeking Her/HisRemoval from the Board of Directors.

To: John Serio, Secretary of the Board

Charges Against Current Board Members

(Not all charges apply to all board members; see below.)

Charge #1

___________, a member of the Board of Directors, has failed to fulfill her/his “fiduciary responsibility to protect the assets of HWFC” [420.1] when they engaged consultants and attorneys and initiated a process to replace the Member Labor Program when there was no legal justification for claiming that the MLP was illegal. Such process and hiringsunnecessarily expended substantial monies.

Charge #2

Without membership approval, the

Board of Directors and ____________,

a member thereof, disallowed new

shareholders and members from

working weekly schedules to achieve

greater purchasing discounts,

Charge #3

Without membership approval,

_________ further prohibited working

members who had worked weekly

schedules from returning to such weekly

schedules once they had given up that

weekly schedule.

Charge #4

The Board of Directors and _________ have

prohibited Board members from having any

public discussions or disclosures of board

business by requiring individual board

members to sign a confidentiality agreement

or non-disclosure document which is

contrary to any legitimate authority that such

board or ___________ possesses and is

contrary to the spirit and purpose of the

HWFC. (See Bylaw section 470.1)

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Charge #5

The Board of Directors, and __________

as a member thereof, refuse to provide to

the shareholders and membership

detailed periodic financial information of

the HWFC to include salaries and

expenses of co-op management.

Charge #6

Without membership approval, the Board

of Directors and ______________, a

member thereof, voted on October 20,

2015 to “end member labor on the floor

and administration by January 1, 2016"

which vote exceeded any authority given

to the Board or its members pursuant to

section 330 of the Bylaws.

Board Member Charges

Deborah Dennis #1 through #6

Leif Hartmark #1 through #6

Rossana Coto-Batres #1 through #6

Ned Depew #1 through #5

Bill Frye #1 through #6

Roman Kuchera #1 through #6

Daniel Morrissey #1 through #5