Nominating Committee Membership
Review
MAC Nominating Committee Membership Work Group
June17, 2015
155 North 400 West, Suite 200
Salt Lake City, Utah 84103-1114
Nominating Committee Membership Review
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Executive Summary
To Follow
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Table of Contents
Introduction...................................................................................................................................... 1
Ideal State ........................................................................................................................................ 1
Problem ............................................................................................................................................ 1
Work Plan ......................................................................................................................................... 2
Understand the History (March & April 2015) ....................................................................................... 2
Identification of Structures (May 15, 2015)............................................................................................ 2
Prepare Whitepaper & Draft Recommendation (May 16, 2015 – June 15, 2015) ................................. 2
Obtain MAC approval to issue Whitepaper & Draft Recommendation (June 23, 2015) ....................... 2
Socialize Options (June 24, 2015 – July 22, 2015) .................................................................................. 2
Identify Structure to Recommend (July 23, 2015 – August 10, 2015).................................................... 2
Recommend Structure (August 19, 2015 MAC Meeting) ....................................................................... 2
Present Approved Recommendation to Section 4.9 Review Working Group and Board (September 2,
2015) ....................................................................................................................................................... 2
Develop alternative strategies - Identification of Solutions ................................................................ 3
1. Status Quo - Three Directors and Four MAC Members ..................................................................... 3
2. & 3. Maintaining Voting Balance ....................................................................................................... 3
4. & 5. Expanded MAC Member Rotation ............................................................................................. 3
6. Reduced NC Size ................................................................................................................................. 3
7. No MAC Representation on NC.......................................................................................................... 3
Comparison of NC Structures (Table) ................................................................................................. 4
Further Discussion ............................................................................................................................ 5
Existing Bylaws ........................................................................................................................................ 5
Status Quo - Three Directors and Four MAC Members .......................................................................... 5
Why Change? .......................................................................................................................................... 5
The Options ............................................................................................................................................. 6
MAC Input ............................................................................................................................................... 6
Membership Views ................................................................................................................................. 7
Recommendation (Draft) .................................................................................................................. 7
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Introduction
The WECC Nominating Committee (“NC”) is delegated two major tasks under the WECC bylaws:
determine a slate of Director candidates to be presented for election by the WECC Membership each
year; and provide a recommendation annually with respect to Director compensation for approval by
the Member Advisory Committee (“MAC”).
The composition of the NC is defined by Section 6.4.1 of the WECC bylaws. The nominating committee
is to consist of seven, three being Directors, not standing for re-election, and four being drawn from
the MAC, two being from Classes 1, 2, and/or 3, and two being from Classes 4 and/or 5.
Voting majority requirements for approval by the NC of either the slate of candidates or the
compensation are defined by Sections 6.4.2.4 and 6.4.5 respectively. In both cases, a total of five votes
are required for approval, ensuring that at least one Director and two MAC Members are included in
an approval vote.
The Nominating Committee Membership Work Group (“NCMWG”) was formed by the MAC to review
whether a change in the NC membership should be considered and, if so, identify what modifications
might be necessary within Section 6 of the bylaws to make such a change.
While the NCMWG’s timeline is designed to meet reporting milestones at certain MAC and Board
meetings, it should be noted that the review of the NC Membership by the NCMWG is NOT part of the
wider 4.9 Review being carried out by WECC.
Ideal State
The NC should be sufficiently large to ensure that substantive debate occurs but small enough to be
manageable, both during deliberation and during any candidate interview process.
The NC should be perceived to be representative of the membership interests. Its composition,
therefore, should be inclusive and balanced to ensure that the slate of candidates nominated are
diverse in knowledge, background and skills and that together with the incumbent Board Directors will
create a Board that meets the intent of the requirements of Section 6.2 of the WECC bylaws with
respect to Board Member qualifications. Balanced participation should be maintained in a number of
areas such as incumbent Directors versus MAC Members, electric line of business companies versus
customers, and regulators and other interested parties.
Problem
Some concern has been expressed by the WECC membership and by some MAC Members that at least
one member class (1, 2 or 3) is excluded from the process on an annual rotating basis and that this
perceived inequity is compounded by the recent addition of the international presence on the MAC.
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While the international members are represented by their membership class, they do not have
opportunity to present a separate international voice.
Work Plan
Understand the History (March & April 2015)
The composition of the NC was the subject of considerable discussion during the WECC bifurcation
process. As a starting point, collect and assess all available information pertaining to those discussions.
Identification of Structures (May 15, 2015)
NCMWG to identify and tabulate, with pros and cons, a series of possible structures for the NC that
approach the Ideal State.
Prepare Whitepaper & Draft Recommendation (May 16, 2015 – June 15, 2015)
NCMWG to prepare Whitepaper identifying options and providing a draft recommendation.
Whitepaper to be used to seek membership input.
Obtain MAC approval to issue Whitepaper & Draft Recommendation (June 23, 2015)
MAC to review and approve Whitepaper for use in membership comment period.
Socialize Options (June 24, 2015 – July 22, 2015)
NCMWG to publish Whitepaper identifying options being considered and a draft recommendation, for
membership input.
Identify Structure to Recommend (July 23, 2015 – August 10, 2015)
NCMWG to collate any input received, determine preferred NC structure and prepare final
recommendation for MAC consideration.
Recommend Structure (August 19, 2015 MAC Meeting)
NCMWG to bring recommendation to MAC for review and approval.
Present Approved Recommendation to Section 4.9 Review Working Group and Board
(September 2, 2015)
Present recommendation to Board.
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Develop alternative strategies - Identification of Solutions
The NCMWG has identified a range of NC structures that might address the problem.
It is acknowledged that the NC appears to have operated effectively since bifurcation despite this
perceived inequity and therefore the status quo was considered as one end of the spectrum. At the
other end of the spectrum, the NCMWG considered a Director only NC to represent independence and
to mirror the nomination process used by some large utilities.
1. Status Quo - Three Directors and Four MAC Members
Three Directors plus two MAC Members selected from Classes 1, 2 & 3 and one MAC Member from
each of Class 4 and Class 5.
2. & 3. Maintaining Voting Balance
Six MAC Members, one selected from each Class and one from International plus either:


Three Directors - MAC Members have proportional vote to maintain existing balance
Five Directors – all NC members have a single vote
4. & 5. Expanded MAC Member Rotation
Three Directors plus four MAC Members, with MAC Members selected by either:


Two MAC Members rotated between Classes 1, 2 & 3 and Two MAC Members rotated between
Classes 4 & 5 and International
Four MAC Members rotated between Classes 1 through 5 and International
6. Reduced NC Size
One Director plus two MAC Members, with one MAC Member representing Industry and one
representing non-industry interests.
7. No MAC Representation on NC
Three or more Directors only.
Further discussion of these Options is presented in the following Sections.
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Comparison of NC Structures (Table)
Option
Description
By-Law
Change
1
Status quo; no changes made to the current
process
No
Pros




2&3
Six MAC representatives (Classes 1 through 5
plus International) plus:
Yes
Either Option 2


Voting &
Members
Three Board representatives
MAC reps with fractional vote to maintain
existing balance with Directors.
4&5
Easy to implement
Manageable size
International members are represented through their
classes 1 – 5
The process resulted in candidates that were ratified and
elected by WECC members
Each Class and International has a vote, aligning with
MAC membership and reflecting comparability and
equitability
Maintains existing balance with Directors.
Option 2 does not increase Director representation on
the NC
Expanded involvement in review of candidates
Additional input into the process is recognized
Five Board representatives
All representatives one vote
Four MAC representatives and Three Board
representatives with:
Yes


Either Option 4






Or Option 3



Cons
Members
only
Classes 1, 2 and 3 share two seats
Classes 4&5 and International share two
seats.

Or Option 5
The classes are treated comparably and equitably,
rotating representation on the NC – two seats for three
Classes or four seats for five Classes and International
The International Members represent more than industry
and have responsibilities to all the stakeholders in their
countries; it may be reasonable to have them included
with Classes 4 and 5
Does not change the composition of the Nominating
Committee

Perceived as in-equitable
o
One of the Classes 1, 2 or 3 is disenfranchised
every three years,
o
No specific representation is provided for
International members

Revision to the bylaws to include International
representation on the Nominating Committee and either
fractional voting or possible additional Directors
o
Fractional vote for Option 2, Unequal individual votes
could lead to unbalanced discussion and possible
“intimidation” or other unintended consequences

For Option 3, additional Directors may mean additional
expense

Additional people (two or four) involved in the decision
making and interview process.
o
On rotational basis, two classes could defer
involvement in interview

Revision to the bylaws to include International
representation on the Nominating Committee and
identifying:
o
either sharing of two seats by Classes 4, 5 and
International
o
or rotation of the existing 4 seats between the 5
Classes and International

6
Classes 1-5 and International share four
seats with equitable rotation.
Two MAC representatives and Three Board
representatives

One representative from industry and one
representative from non-industry

Consider reducing Board Representation
also
Yes


Voting &
Members
Equal representation afforded to industry and nonindustry classes
Potentially reduces the number of MAC and Director
representatives on the Nominating Committee to two
MAC and one Director rather than four and three (if
acceptable to Board)



7
Nominating Committee comprised entirely of
incumbent Board directors
Yes


Members
only
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Avoids the question of how Classes are represented in
the NC process, and allows membership to be on an
equal footing
Membership still has ultimate veto ability during the
annual-meeting process
May be more appropriate for a Board whose
independence is a vital characteristic
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Revision to the bylaws to reduce NC membership and
potentially define rotation of seats between Classes
and International
Creates more disparity since Classes 1, 2 & 3 would
share seat and Classes 4 & 5 would share a seat.
Unclear whether International would be industry or nonindustry and which seat it would share
Reduced NC size could lead to insufficient discussion
to aid best candidate selection
Could create a disconnection between the Board and
Members.
Removing MAC involvement also removes the ability of
a subset of MAC to endorse the slate of candidates and
assist in the election.
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Further Discussion
The process that the NCMWG is following has been structured to ensure that membership comment is
actively sought prior to finalizing any recommendation. However in developing the initial draft of this
white paper, only limited outreach has been performed. The opinions relating to the current situation
and the options being considered are therefore primarily the opinions of the members of the NCMWG.
Existing Bylaws
The bylaws pertaining to the make-up of the NC are:
6.4.1 - Nominating Committee. Candidates for a Director position shall be nominated by a Nominating
Committee. The Nominating Committee shall consist of seven members. Three members shall be
Directors, not standing for re-election, designated by the Board Chair. The remaining four Nominating
Committee members shall be designated by the Member Advisory Committee and come from
individuals serving on the Member Advisory Committee, with two (2) members being from Classes 1, 2,
and/or 3, and two (2) members being from Classes 4 and/or 5.
6.4.2.4 Five (5) affirmative votes of the Nominating Committee shall be necessary to put forth a
nominee to the Members.
Status Quo - Three Directors and Four MAC Members
The NC, as currently defined in the bylaws (three Directors plus two MAC Members selected from
Classes 1, 2 & 3 and one MAC Member from each of Class 4 and Class 5) has carried out one candidate
selection process and is in the midst of a second. Based on the outcome of the 2014 process, the NC
identified highly qualified candidates, using an effective and time appropriate process. The identified
candidates proved to be acceptable to the membership at large, being elected to the Board by a
substantial majority vote from all Classes, including by the membership of Classes not then currently
represented on the NC. The resulting Board has been appropriately diverse in background and opinion
and has represented the interest of the organization and membership.
The NC has also overseen a review of Director compensation, producing a recommendation that was
approved by the MAC by a substantial margin.
Why Change?
There is a perception that the current structure is not inclusive and that the initials steps of the
selection process, or compensation review, specifically exclude the collective international viewpoint
(although international members views are represented in their individual classes) and either Class 1, 2
or 3 on a rotating basis. While the limited history of operating under the current structure does not
indicate that it leads to a result that is unacceptable to the excluded class(es), it may in the future.
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The Options
The NCMWG has reached consensus that options that permanently exclude representation from any of
the Classes are not going to be acceptable to the membership – this leads to the rejection of Options 6
& 7.
The NCMWG has also reached consensus that the existing balance between Board and MAC
representation (and/or voting strength) on the NC is appropriate and should be preserved.
The majority opinion of the NCMWG is that increasing the size of the NC is an undesirable outcome,
and there is a clear preference to retain the status quo, with either Option 4 or Option 5 as the
alternate, further evaluation and discussion being needed before deciding between these two options
if necessary.
This majority opinion conflicts with the minority opinion that all classes (plus an international voice)
should be represented on the NC at all times.
As it stands today, without soliciting specific input from the membership, the NCMWG
recommendation to the MAC and ultimately to the WECC membership would be that no adjustment
be made to the membership of the NC, or the bylaws that govern the selection of NC members.
Clearly this would be a majority recommendation and not a consensus recommendation.
MAC Input
The NCMWG believes that prior to providing a final version of this whitepaper to the membership
seeking their input, we need to solicit input from the full MAC at the forthcoming in-person June MAC
meeting and potentially adjust the whitepaper accordingly.
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Membership Views
Further update anticipated after MAC and/or Member comments received to the following
questions:
The Nominating Committee Membership Working Group recommends maintaining the current makeup of the Nominating Committee, but are seeking Member input:
Do you favor retaining the current make-up of the Nominating Committee, i.e. Three Directors and Four
MAC Members (Two MAC Members selected from Classes 1, 2 & 3 and one MAC Member from each of
Class 4 and Class 5, no separate international representation) for a period of two years with a further
review of the effectiveness of the committee at some stage after that?
Or
Do you support the MAC recommending a change to the structure to Three Directors and Six MAC
Members (one MAC Member from Classes 1 through 5 plus International) with an appropriate
adjustment to the majority voting requirements to maintain the current balance between Board and
MAC?
Or
Do you wish other options further considered before finalizing the recommendation?
Recommendation (Draft)
To be further refined following MAC and/or Member comments received. Assuming nothing changes
The NCMWG recommends that:
The current make-up of the Nominating Committee, i.e. Three Directors and Four MAC Members (Two
MAC Members selected from Classes 1, 2 & 3 and one MAC Member from each of Class 4 and Class 5,
no separate international representation) be retained; and
A further review of the effectiveness of the Nominating Committee and its make-up be performed after
the Nominating Committee membership has cycled through all classes in approximately two years, if
necessary.
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Disclaimer
WECC receives data used in its analyses from a wide variety of sources. WECC strives to source its data
from reliable entities and undertakes reasonable efforts to validate the accuracy of the data used.
WECC believes the data contained herein and used in its analyses is accurate and reliable. However,
WECC disclaims any and all representations, guarantees, warranties, and liability for the information
contained herein and any use thereof. Persons who use and rely on the information contained herein
do so at their own risk.
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