The shareholders would like a full complement of board members as soon as possible; however, the ex-member would not be considered acceptable. It is my understanding that the new board president has the privilege of deciding how to deal with this matter. Is this correct? What is the appropriate manner in which to proceed with this situation?
— Shareholder Successors
“Most cooperative bylaws provide that a board vacancy is filled by majority vote of the remaining members of the board. In some cases, the bylaws provide that a special meeting of shareholders is required to be called to fill the vacancy. It would be extremely unusual for the bylaws to grant the president the power to fill a board vacancy, as the cooperative’s officers are elected by the board of directors.
“The proper procedure is for a board meeting to be called for the purpose of electing a new board member to fill the existing vacancy. The president or any board member can call a special board meeting, usually on two days’ notice to the other board members, and the notice of special meeting should state that the purpose is to fill the board vacancy. At the meeting, the existing board members nominate individuals to fill the vacancy and elect the successor by majority vote. It is always good practice to call the prospective candidates in advance, be sure that they will accept the office if elected, and ask them to be present at the board meeting to address the existing board and explain why they believe they would be a good board member.
“The remaining board members are not obligated to select an unsuccessful candidate who ran for the board to fill a board vacancy. The board members may believe that such person will be antagonistic to them, will promote policies that they do not agree with, or is just not qualified for the position and that the cooperative and its shareholders will suffer by such choice. Instead, the board should select the most competent person available to fill the open seat. The board members may select someone they believe will complement the talents of sitting board members and who will get along with them.
“Should the shareholders, at the next annual meeting or at a special meeting called for such purpose, disagree with the board’s choice and wish to have a different person serve on the board, they can elect a replacement rather than elect the board’s selection to serve another term of office.”
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