Re: Possible short-term paid contract with a director. Feedback welcome off-list.

On Thu, Feb 21, 2019 at 10:06:36PM -0500, Jimmy Kaplowitz wrote:
> Therefore, the non-conflicted directors are discussing a proposal to pay
> Martin Michlmayr for roughly 40 hours per month for three months as an
> independent contractor, to: get our books and reports in order, explore
> what we'd have to do to undergo a financial audit successfully, and
> explore other funding possibilities for paid staff and donor system
> improvements. We would not be paying him for his role as a director,
> only for the specified services. This will be voted on at our March 1
> in-person meeting, with Martin not present in the room.

Just a quick update on this: a quorum of 6 non-conflicted directors
discussed this and voted to proceed with such a contract. It was signed
on March 2 and began on March 4 with a term of three months. We did not
pre-approve any extension beyond that, though the possibility remains to
consider that in the future if warranted. The contract terms are
consistent with the summary quoted above, with a few uncontroversial
changes (e.g. our current charitable registration is insufficient to pay
for fundraising solicitation so we're not doing that in this contract).

Before that vote, the same group of directors voted to approve a minor
wording amendment clarifying what was already the intent (if not the
letter) of our Conflict of Interest Policy: the existing wording had
explicitly allowed the board to approve personal benefit by directors
serving as paid employees, but it was silent on the case of independent
contractors like Martin Michlmayr. We can't imagine why this should be
permissible for paid employees but not independent contractors, so we
believe this was a mere drafting oversight. We added the words "or
independent contractors" after the words "paid employees" in the
existing policy text. (For those of you who know that the IRS sometimes
considers officers as employees if they're paid for services, this rule
does not affect non-officer directors.)

I received several emails from members in response to my call for
feedback on this list - somewhere around 6 of you spoke up. Every single
one of those emails encouraged us to proceed. Some of you did express
that this was an unfortunate conflict of interest, and that it would be
better if we weren't contracting with a director. But you felt that
SPI's current circumstances outweigh those concerns in the short term.
We considered this input when making this decision, and we thank you for
commenting.

A bit more information will be shared in due course as we proceed with
the secretarial tasks resulting from the face-to-face meeting, including
a mention of this vote in the meeting minutes and the posting of the
approved resolution texts to the usual website.

Thanks again.

- Jimmy Kaplowitz
president(at)spi-inc(dot)org