Arrowhead Electric Members to vote on Bylaw Changes at Annual Meeting

The Arrowhead Electric Cooperative (AEC) will hold its Annual Meeting on Saturday, June 4, 2022 at 10:00 am. The order of business includes voting on a host of proposed amendments to its Articles of Incorporation and Bylaws, the documents containing the rules and regulations for how the Coop operates.

The proposed changes will not be amended individually at this meeting, so members must vote to accept or reject the new Articles and bylaws as presented in their entirety. An analysis follows.

Three to five years is a common rule of thumb for when associations or cooperatives should review and update Bylaws and Articles of Incorporation. The current AEC bylaws were last updated at its annual meeting in 2001.

While most of the proposed changes involve updating language and recognizing the latest technology for communications, there are some changes that are fundamental. AEC has prepared and made available on its website a document that presents the changes along with lined out text of the current language that will be deleted. AEC encourages members to review this document before voting.

Annual Meeting Order of Business

The current bylaws, Article III, Section 7, relate to the Annual Meeting’s Order of Business to be followed at the meeting. Proposed Article 4, Section 4.1 would remove that “Order of Business'' in order to “provide more discretion to the Board of Directors to set the order of business at the annual meeting,” according to the text explaining the changes.

Director Term Limits

Directors are currently limited to serving no more than four consecutive terms of three years (a director can serve 12 consecutive years at present). Section 5.3 of the proposed bylaws would increase that limit to six consecutive three year terms, leaving the possibility of a director serving for 18 consecutive years.The explanation for this change is, “Rapid changes in the energy industry and increased demands of directors require Board members to have extensive knowledge and certifications.” AEC goes on to claim this change will allow sufficient time to onboard new directors and complete their training. And ultimately allow the Coop to benefit from directors training and experience.

Campaign Finance

Section 5.5 in the proposed document provides for new financial disclosure requirements for any candidate for a board position who accepts outside money or so-called in-kind contributions to fund campaign expenses for the election. The requirements are thorough, and a violation could lead to removal of the candidacy or office holder as determined by a neutral arbitrator selected by the Board.

Public Notice

Current bylaws require that a notice be published in the legal weekly newspaper of the county where AEC is located to seek nominations to fill board positions for the general election at the Annual Meeting and to fill vacancies that occur on the Board. That notice requirement is eliminated in Sect 5.6 and 5.67 in the proposed bylaws.

Directors indemnified for Breach of Fiduciary Duty

Section 7.4 of the proposed Articles of Incorporation contains language that states, “Members of the Board of Directors shall have no personal liability to the Cooperative or its members or nonmember patrons for monetary damages for breach of fiduciary duty as a director,...”

Term limits for Officers

AEC has four Officer positions that are held by Directors (President, Vice President, Secretary, and Treasurer). These positions are currently elected to a one year term each year by the Directors at their first organizational meeting after the Annual meeting. No director may serve more than two consecutive terms in that office under the current regime. That term limit is eliminated in the proposed bylaws.

From two-thirds to simple majority

Under current bylaws, a 2/3 majority vote of the members voting is required to approve bylaw changes. It is now proposed that bylaws could be changed by a simple majority--50% plus one. This is a classic parliamentary move.

Board unanimous in recommending changes

In its printed presentation AEC states that over the past year the Board of Directors, AEC staff, an attorney, and AEC auditor reviewed the current documents. The new Articles and Bylaws were approved unanimously by the Board of Directors.

To present new bylaws and Articles of Incorporation, AEC has prepared a 28-page document for members to review prior to casting their ballot. The majority of changes are making the switch from the word “association'' to “Cooperative” and changing Roman numerals marking the sections to the Arabic counterpart and reorganizing sections for clarity. In addition, changes have been made to recognize the technology that exists for online meetings and voting.

If you have comments, questions, or concerns about the changes you may contact the director who represents you directly, visit the AEC website, or call AEC at (218) 663-7239.