Director elections and appointments - current scenario

Started by GeorgeS21 • 19 replies • 377 views

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GeorgeS21 (Florida)
Posts: 3,808

Posted:

Hi All,

Please stay with me on this - I need some sounding board advice :-)

Current HOA of 650 SFHs in Florida with staggered director positions with 5-7 seats, but not less than three, per Bylaws (sections excerpted, below).

“The affairs of this association shall be initially managed by a Board of five (5) directors, who need not be members of the association. There shall never be less than three (3) director’s, not more than seven (7). The number of directors may be changed by an Amendment to these By-Laws made pursuant to Article XII.”

“Directors shall be elected at the annual meeting and shall serve for a term of three (3) years or until their successors are duly elected. The initial Board of Directors may set the first term of one-third (or in its discretion approximately one-third) of the members of the Board of Directors at one year, one-third at two years, and one third at three years so that one-third of the Board of Directors will be up for election or re-election each year."

For the past 5-10 years there have been seven directors, with replacements for directors resigning being appointed by the Board for the unexpired term of that particular director.

Starting 2020 - seven directors with staggered three year terms
- one resigned mid year and replacement was appointed (net 7)
- one resigned three months ago and a replacement was appointed (net 7)
- sitting president resigned two months ago, but the board decided to not replace (net 6)

Membership meeting is January 2021.
- total of six directors at beginning of annual membership meeting (net 6)
- two directors are resigning early, Im assuming this is considered to be just prior to the vote (net 4)
- three of the director's three year terms are ending (net 1)
- one director is remaining (at the moment of voting?) (net 1)

Options?
1. Membership elects three (3) new directors with three year terms, and three (3) new directors with staggered terms to mesh approximately?

2. Membership elects six (6) new directors with staggered terms to mesh with the one (1) director remaining?

3. Membership elects three (3) new directors with three year terms, then, after membership meeting adjourns, the NEW Board of four (4) meet following the membership meeting to appoint three (3) directors to the unexpired terms of the three directors who resigned prior to end of their terms? (Current crowd wants to base this on those drawing most votes who were not elected to the board by membership for the three expired seats)

4. Membership elects three (3) new directors with three year terms, then, prior to adjourning the NEW Board of four (4) meets to appoint three (3) directors to the unexpired terms of the three directors who resigned prior to end of their terms? (Current crowd wants to base this on those drawing most votes who were not elected to the board by membership for the three expired seats)

Thoughts?

JohnC46 (South Carolina)
Posts: 14,265

Posted:

While I am confused on what you said, I say those with the most votes fill the longest terms and those with less votes fill the shorter terms so you end up with staggered terms as originally defined.

GeorgeS21 (Florida)
Posts: 3,808

Posted:

John,

That is another version ...

What trying to consider is: a board is elected by membership (in this case net 4 directors). They meet - they discuss and find that the other three nominees were lacking - and, there are a lot of reasonable considerations in this assessment - and, they say: "no, we are going to fill only one of the three previously resigned seats with a person we trust and can work with - instead of the other three who only got 5 votes each because they are not suitable." Or, "we are going to find three suitable directors over the next couple of months that were not part of the group that lost."

AugustinD
Posts: 5,144

Posted:

Quote:

Posted By GeorgeS21 on 12/16/2020 10:00 AM
“Directors shall be elected at the annual meeting and shall serve for a term of three (3) years or until their successors are duly elected. The initial Board of Directors may set the first term of one-third (or in its discretion approximately one-third) of the members of the Board of Directors at one year, one-third at two years, and one third at three years so that one-third of the Board of Directors will be up for election or re-election each year."

From FS 720.306 (9) (c):

=== Start Excerpt ===
Unless otherwise provided in the bylaws, any vacancy occurring on the board before the expiration of a term may be filled by an affirmative vote of the majority of the remaining directors, even if the remaining directors constitute less than a quorum, or by the sole remaining director. In the alternative, a board may hold an election to fill the vacancy, in which case the election procedures must conform to the requirements of the governing documents. Unless otherwise provided in the bylaws, a board member appointed or elected under this section is appointed for the unexpired term of the seat being filled.
=== End Excerpt ===

Quote:

Membership meeting is January 2021.
- total of six directors at beginning of annual membership meeting (net 6)
- two directors are resigning early, Im assuming this is considered to be just prior to the vote (net 4)

To me, resigning the day of the election, or one to 13.9 days before the election, and before the vote, is really frickin' unacceptable. Notice for a membership meeting is 14-days before the scheduled date of the meeting. Due to notice requirements, resigning minutes before the vote results in the new Board not having the option to run an election for these two seats (as allowed by FS 720.306 as quoted above). And no, the election may not suddenly change to an election to include filling of these two frivolously vacated seats. Again, this is due to notice requirements.

So Directors Larry and Moe, with terms not set to expire for at least another year, resign // frivolously // IMO minutes before the vote. Per FS 720.306, the current Board of four (minutes before the vote) has two options:

-- The four directors can instantly (&^%$#* -- this is me cussing) vote to appoint two new directors before the annual meeting election.

Or

-- The four directors can say, nope, we will leave the decision up to the new board.

I say that, before the membership vote, the four directors should call for a round of boos for former Directors Larry and Moe, who have tied the Board's hands and most importantly, IMO, used a loophole to keep the membership from electing directors to replace them at the 2021 election.

Quote:

- three of the director's three year terms are ending (net 1)

Great. Some sanity. The notice for the annual meeting should advertise that the membership will vote on three new directors to replace good Directors Robbie, Chip and Ernie.

Quote:

- one director is remaining (at the moment of voting?) (net 1)

Per FS 720, I say that four directors remain until the votes are tabulated.

Until scumbag directors Larry and Moe figure out how they are complicating things and decide how they will proceed, and then effectuate this decision, I do not want to speculate on possibilities here.

JohnC77 (California)
Posts: 562

Posted:

That's the biggest convoluted mess of options I have ever seen in my life. Your goal, if there is one, is to make the process simpler not more difficult. Then you get to have either membership or owners trying to interpret. NO thank you.

Only membership should be able to increase or decrease board size. Community of that size should have 5 members, no more. The community can be effectively run by a group of committees. You have a management company running the day-to-day operation.

1. 5 Board members, two year terms, staggered, 4 one year, three the next. PERIOD!

ND (PA)
Posts: 792

Posted:

Wait . . . is this hypothetical . . . ?!?

ND (PA)
Posts: 792

Posted:

While I do agree with the recommendation to try and make it a 5-person Board, it sounds like resignations are the norm on your Board (the real issue worth looking into), so you may need to try and keep a Board of 7 so you at least have a little continuity prior to the next resignation.

But your convoluted scenarios are tough to follow. Simplest is to fill open seats with whoever is actually running in the election instead of trying to pull some after-election shenanigans to appoint people to the Board. And those receiving more votes could get the longer terms. Sometimes term length doesn't matter anyway and may not in your case either . . . anyone with a 3-yr term who doesn't actually plan to fulfill the term can/will just resign anyway.

Further, if there are people you plan to appoint at some time, then get them to actually run for the Board in the election, advocate/campaign for them, and have them properly elected by the membership and all will be good.

GeorgeS21 (Florida)
Posts: 3,808

Posted:

I've probably overcomplicated this, but I am trying to figure out a new neighborhood's intent, history, etc.

When I say two of the net 6 at the beginning of the membership meeting are resigning early I mean they have already announced their intention to NOT continue - I should have been more clear - but there has to be a stop-start for these positions, so is it at the time of commencement of the membership meeting?

And, three (3) current members are at their three year term limit and have chosen to not continue. This means six seats will need to be filled, right?

Current
7-1 = 6 (Board did not appoint) (1 position available to be appointed)

At membership meeting
6-2 = 4 (the two who are resigning early) (total of three available to be appointed, but this is effective at the annual meeting)
4-3 = 1 (the three whose terms are expiring and not running again) (this is easy part)
1+3 = 4 (three positions are announced to be filled by membership vote) (this is easy part)

Big breath - I would go back to the options - probably should be scenarios - but, this is painful.

So, what should happen?

Side question no one asked about - Can the new board meet as a board prior to the membership meeting adjourned?

AugustinD
Posts: 5,144

Posted:

Quote:

Posted By GeorgeS21 on 12/16/2020 12:04 PM

When I say two of the net 6 at the beginning of the membership meeting are resigning early I mean they have already announced their intention to NOT continue - I should have been more clear - but there has to be a stop-start for these positions,

Announcing an "intention" has no legal meaning here. Directors Larry and Moe are not off the board until they give the proper notice of resignation, complying with the Bylaws and FS 720. I would assume nothing until this time. I would advise that a board majority inform Directors Larry and Moe that while Directors Larry and Moe apparently want to have a nice round number of years completed before resigning, this simply is not possible without causing a lot of chaos, on account of notice requirements.

Quote:

Posted By GeorgeS21 on 12/16/2020 12:04 PM

And, three (3) current members are at their three year term limit and have chosen to not continue. This means six seats will need to be filled, right?

The Board cannot lawfully give notice that the election is to fill six seats until Directors Larry and Moe are actually off the board.

Quote:

Can the new board meet as a board prior to the membership meeting adjourned?

I think you are going to have to re-post your question using different phrasing. It does not make sense to me (though to me, it does read like an NpB hypothetical).

GeorgeS21 (Florida)
Posts: 3,808

Posted:

Certainly not hypothetical - I can't recall doing much hypothetical in my life.

To the last question, Augustin: The membership meetings in the past in this HOA (before my time), have conducted an election for directors, then following the announcement of the winners, the new Board gets up from their seats (continuing directors plus newly elected) to meet in another area. They elect officers. Then, they return to the membership meeting, they make announcements of officers, and the membership meeting continues until adjourned.

To the intention of resigning - there will likely not be anything more than what has already occurred - they told the other Board members they were not going to continue for their full terms, effective at the annual meeting. I'm thinking this is all there will be.

This is all simply reality at this point.

Simplifying somewhat - given the reality of there being a total of three open director positions following the membership meeting because the election did not include voting for more than three, and assuming the new Board (4) meets legally, is it preferable for them to appoint the other three members (ignoring whether or not those three had been losers at the election), or preferable that the membership meeting elects six (6) directors as we already know there are six seats to be filled?

Told ya to hang in there with me ... :-)

AugustinD
Posts: 5,144

Posted:

Quote:

Posted By GeorgeS21 on 12/16/2020 12:31 PM
Certainly not hypothetical - I can't recall doing much hypothetical in my life.

Ya, I know you are sincere, and that HOAs, such as the one described in this thread, often fall in the category of "One cannot make this stuff up."

Quote:

To the intention of resigning - there will likely not be anything more than what has already occurred - they told the other Board members they were not going to continue for their full terms, effective at the annual meeting. I'm thinking this is all there will be. This is all simply reality at this point.

Okay, arguendo ;) I will assume thusly.

Simplifying somewhat - given the reality of there being a total of three open director positions following the membership meeting because the election did not include voting for more than three, and assuming the new Board (4) meets legally, is it preferable for them to appoint the other three members (ignoring whether or not those three had been losers at the election), or preferable that the membership meeting elects six (6) directors as we already know there are six seats to be filled?

In my opinion, the law, especially re notice, says the board should advertise only the three seats plus the one currently empty seat, for a total of four seats to be 'noticed' to members for filling. Still according to the law, after the election takes place, the board should meet, following proper notice, to consider appointing three more directors.

But since I expect no one on this board is going to understand any of this (especially about the part about notice and the meaningless of stated "intentions"), then the old and new boards should do whatever they think is fair.

Quote:

To the last question, Augustin: The membership meetings in the past in this HOA (before my time), have conducted an election for directors, then following the announcement of the winners, the new Board gets up from their seats (continuing directors plus newly elected) to meet in another area. They elect officers. Then, they return to the membership meeting, they make announcements of officers, and the membership meeting continues until adjourned.

Parliamentiary rules prohibit a board meeting (executive session or otherwise) within a membership meeting. The old board should conduct all the business of the membership meeting, pointedly putting the election results at the end.

GenoS (Florida)
Posts: 4,276

Posted:

Setting up staggered terms is a good idea in theory. Practically speaking, however, it's a nightmare when directors resign prior to their terms being up. Here is what we've considered doing (but haven't actually done yet):

First, one-year terms for all directors. Anyone who wants to return as a director for an additional year must throw their hat into the ring and run again. We've found that the number of directors who can't wait for their terms to end far exceeds the number who decide after a year that they'd like to remain on the board for another year.

Each year, no later than 6 months prior to the next election and no earlier than 9 months prior to the next election, the board may, by 2/3 vote, increase or decrease the number of directors (board members) for the upcoming year so long as the number decided on is no less than 3 and no greater than 7. The absolute limits of 3/7 should be in your Articles of Incorporation while the method for changing that number on a year-to-year basis should be in the Bylaws.

Since all terms are for one year, there's no danger that a sitting board member's term will be cut short as the result of a decrease in the number of directors.

JohnC77 (California)
Posts: 562

Posted:

The meeting to discuss officer positions is call an organizational meeting.

The old board doesn't run the annual meeting, the presiding officer does. Once the new board is announced, they in effect are then seated. The meeting would be adjourned at that time. They can then hold a organizational meeting and elected officers, or they can do that at the next Board meeting. Once completed, they are done for the evening.Gives them time to think things through. The old board can finish up old business, but there should be no new business voted on. That should be done at a special meeting.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Quote:

Posted By GeorgeS21 on 12/16/2020 10:43 AM
John,

That is another version ...

What trying to consider is: a board is elected by membership (in this case net 4 directors). They meet - they discuss and find that the other three nominees were lacking - and, there are a lot of reasonable considerations in this assessment - and, they say: "no, we are going to fill only one of the three previously resigned seats with a person we trust and can work with - instead of the other three who only got 5 votes each because they are not suitable." Or, "we are going to find three suitable directors over the next couple of months that were not part of the group that lost."

Yes I believe the seats should be filled by those that ran in order of vote total and I do not care if some only got 5 votes.

As far as staggering goes, our BOD is 5 with two year terms. Three terms up for election one year. Two terms up for election the next year. Any vacancy, the person elected/appointed fills out the remainder of the term of the person they are replacing. Usually if a vacancy exists and it will only be for a few months, the BOD does not bother to appoint anyone. We have operated quite efficiently with only 3 on the BOD as we did not fill vacancies. We are presently at 4.

GeorgeS21 (Florida)
Posts: 3,808

Posted:

JohnC46,

Why would those not elected by membership get automatic appointability by the new board? Again, I would think the board would consider whether or not they would suitable members of the board. The board has the authority to consider pretty much any factor when appointing, correct? Why would they want to appoint someone they didn't want to wok with?

KerryL1 (California)
Posts: 14,550

Posted:

JohnC77 is right about adjourning the members meeting and convening an organizational meeting for the new Board to select its officers. At least in CA, and away, where, btw, the org. mtg must be open to members. At the org. mtg. the Board confirms the meeting day & time for the following year.

Sorry, George, I simply don't have the mental strength or the desire to deal with the other issue. What's clear is that directors must have staggered terms. We just had our annual meeting and the 4th highest candidate (of 5) had a term of only 1 year vs. two, to keep them staggered. All 5 were strong & the 5th place person lost by only a handful of votes.

But in your case, you might have some really awful ppl. if the Board goes that route.

Are you running?

JohnC77 (California)
Posts: 562

Posted:

Quote:

Posted By JohnC46 on 12/16/2020 1:29 PM

I have always found this interesting with boards. Bylaws states that the association SHALL be governing by a board of whatever...let's say 5. The board decide not to fill the vacancy for whatever reason. The CCRs state no truck shall be allowed in the association and people get fines and taken to court. I understand if nobody wants to serves after asking the community, but isn't this selective enforcement of the governing docs?

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Quote:

Posted By GeorgeS21 on 12/16/2020 1:54 PM
JohnC46,

Why would those not elected by membership get automatic appointability by the new board? Again, I would think the board would consider whether or not they would suitable members of the board. The board has the authority to consider pretty much any factor when appointing, correct? Why would they want to appoint someone they didn't want to wok with?

I understand what you are saying and while I can agree with it, I do not consider it proper. Those elected get "the jobs" even when we disagree with the election results. It is called a Democracy.

GeorgeS21 (Florida)
Posts: 3,808

Posted:

JohnC46,

Not sure I made myself clear - the three openings that could/will be appointed by the new board have, in the past, been the next vote getters from the election. They were not elected, just folks who said they wanted to run and were in good standing. Not sure how that relates to disagreeing with election results since they were not elected.

JohnC77,

Yep, it is generally called the organizational meeting.

Shall be governed by x obviously doesn’t work if there is no one willing to serve. Far different than violating CCRs, etc by actions.

Kerry,

No, not running. I’m still on the Finance Committee and help out sorting a few other issues like Reserve Studies, Detention Ponds, etc.

Augustin,

Yes, I believe procedure does not allow board meetings inside membership meetings.

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