From the Editor 42: Attack Boards

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WHEN BOARDS ATTACK

After a hellish month, I didn’t expect the board to turn on me. But it did.

 

The issue was supposedly simple: who would pay the $2,000 bill for exterminating bed bugs in my apartment. A no-brainer, you say? The bugs traveled through the walls, making it a building-wide problem, right? And you wouldn’t expect the apartment resident to pay for the extermination of rats or mice, right?

Welcome to bizarro world, a place where a shareholder in a cooperative – meaning we all look out for each other – can be required to pay $2,000 for that extermination.

Here’s how it happens: the shareholder who first had bed bugs hires a company to kill the bugs, not once but twice (for $2,000 a pop). After the board initiates its own building-wide bed bug remediation program, it asks the residents to partially reimburse the co-op through an assessment. The out-of-pocket shareholder asks to be exempted from the fee because of the money he’s already put out.

There’s the rub.

Most members of the board don’t want to pay $4,000 for the two jobs because he did that on his own initiative. But, argues one director at a meeting, if we don’t pay for him, how can we justify paying for one of the board members? There is some talk about paying only for the second treatment by the shareholder because the board knew about that beforehand, which seems fair. Then one aggressive board member (who seems to have made this his crusade) asks me to leave – since I have a stake in the outcome. I oblige – although our lawyer later tells me that I actually have as much of a right to stay and discuss the issue as anyone. “Everyone on the board has a personal stake, one way or another.”

About 10 minutes later, I am shocked to learn that the board has voted to have me pay for the extermination costs in my apartment.

The next day, I called the co-op’s lawyer. He was also surprised. He subsequently wrote a letter to the board, saying in part: “While it is very true that in a small building such as yours, the potential for conflicts of interest are greater, it is not necessarily so that a position on the board inevitably results in a conflict. Obviously, whatever the board decides affects not only the other shareholders but the board members themselves. However, the guiding principle for all directors is to act in the best interests of the corporation and all of the shareholders.

“I do not believe that Tom Soter acted to achieve personal gain at the expense of the other shareholders by requesting that the [new] bed bug policy which was crafted by myself and the board be applied retroactively. It should be noted that after consultation with me, it was recommended to the board that all shareholders receive the benefit of a retroactive application in accordance with the new policy. So while the board’s initial decision was legal, its reconsideration of a prior decision [requested by Tom Soter] was equally valid and appropriate.”

The decision was later rescinded, and at that time I was accused by one board member of “going behind the board’s back” to consult our attorney, to which our lawyer responded: “Any board member has the right to contact me to discuss corporate policy or decisions. In a small building some of those decisions may impact one or more members of the directorate directly, but so long as corporate policy is applied equally to all shareholders, then fairness is achieved.”

Indeed, that says it all: the bottom line for boards is you should try to treat everyone with fairness, common sense, and compassion. Or, as that great philosopher Rodney King put it: “Why can’t we all just get along?” 

Habitat, February 2013