An interest not common to others

[smb]

The following statement on p. 407 has been the subject of many posts.  Sorry to bring it up again, but I don't think this particular question has been addressed.

"No member should vote on a question in which he has a direct personal or pecuniary interest not common to other members of the organization. For example, if a motion proposes that the organization enter into a contract with a commercial firm of which a member of the organization is an officer ..."

My question is very narrow.  What is the meaning of "not common to other members of the organization"? I often see board members unnecessarily abstaining* on votes because they think they have a conflict when, in fact, there is no conflict. The issue may be who to send as a delegate to a conference, fixing the $ amount of stipends or other compensation, etc. The example given on p. 407 suggests that the rule applies only when the pending question relates  to a personal or pecuniary interest that is "outside" the organization itself.  Is that a correct reading? Suppose we have an organization of web-designers; a member thinks the organization's own website needs to be redesigned but recognizing how much work that entails thinks that they should pay a token amount of $500 to whichever member the Board tasks to do it -- he wants to establish the principle that just because they all have skills, no one should be expected to do the work for free.  At this point, we don't know which member will be asked or volunteer to do it -- it could be any of them.   So it seems clear to me that all members can vote on this issue with a clear conscience -- they have no conflict and no one need consider abstaining*.  Now we change the scenario a bit -- Helen has previously offered to redesign the website;  another member now offers the same motion to compensate her for her time.  Should she consider abstaining?  

* We know that even when there is a conflict, one still has the right to vote and no one can be compelled to abstain.  The only issue I am concerned with is whether there is even a need to consider doing so.  

I hope I have not made the issue too simplistic -- my purpose in bringing this up is not to have others simply conclude whether or not Helen should abstain.  My purpose is to see how others interpret the meaning 'not common to other members"  -- even with other examples -- or to discover if there is already a broader analysis or discussion of the issue that I have somehow overlooked.

Thx

[Kim Goldsworthy]

There is no "bright line" to universally decide "who is conflicted".

Or, if you prefer, the "bright line" is (a.) pecuniary: (b.) personal.

***

"Pecuniary" is defined as "of or relating to money".

I don't think there will be many instances where we don't know "cui bono?" (Latin, "Who benefits?") when money is changing hands.

>> Helen has previously offered to redesign the website;  another member now offers the same motion to compensate her for her time.  

>> Should she consider abstaining?

Yes.

Why?

• Because voting "aye" will put money in her pocket, money which was dues money of the other members.

(There is no conflict of interest where Helen votes "no", as she gains nothing. But a "no" vote isn't a test of a "conflict of interest", as there is no personal gain. It is the "yes" vote which is to be feared.)

***
You would benefit greatly by reading your state's corporations code.

There are sections in one's state's corporations code mentioning a concept called "self-dealing"

The state frowns on self-dealing, and has laws against self-dealing.

So, if you are looking for a bright line demarcation, then use self-dealing as your standard.

But don't come back and ask "Is Scenario X is self-dealing or not" because that creates a logical howler (a.k.a. a vicious circle).

 

[Dan Honemann]

In this connection, it is important to keep in mind that, under the rules in RONR, it is up to the member himself to determine whether or not he has a direct personal or pecuniary interest not common to other members of the organization in the outcome of the vote on a pending question, and whether he will or will not vote for this reason. It is his decision, and his decision alone, to make. Since no member can be compelled to refrain from voting for this reason, it is not in order (in my opinion) for a member to waste the assembly's time by raising a point of order that another member should not vote on a question for this reason.

To the best of my knowledge, there is no analysis or discussion of this issue that is of any authority other than that found on pages 407-408 of RONR.

If there is applicable law controlling a question as to whether or not a member may vote, that law will, of course, take precedence over any rule in RONR with which it may conflict. This is a totally different question, and one which is beyond the scope of this forum.

 

 

 

[smb]

Thanks for the comments -- Daniel is such a ubiquitous presence on this board that his conclusion there is apparently no analysis or discussion is good enough for me, and that's mostly what I was looking for.  As for Kim's comment, while we should always be aware of state laws on an issue, I chose not use the legal concept of 'self-dealing' as the standard because most state laws define that term very narrowly -- much more narrowly than RONR.  I.e., RONR refers to pecuniary interests generally -- the self-dealing principles of California law (for example) apply to only a very small subset of what might be considered pecuniary interests.  That's the reason I brought this up -- I see directors of nonprofits frequently abstaining on monetary issues that affect them personally because they think they 'should' do so -- even though corporate law has no concerns.   The problem is that corporate law often requires a majority of the board for approval, not those present and voting, so their abstention is equivalent to a 'no' vote.